REGULATION  OF  RAILWAY  RATES. 


!  385 
Un33r 


HEARINGS 


BEFORE  THE 


COMMITTEE  ON  INTERSTATE  COMMERCE 


UNITED  STATES  SEISr ATE, 
IN  SPECIAL  SESSION^ 

PURSUANT  TO  SENATE  EESOLUTION  NO.  288, 

FIFTY-EIGHTH  CONGRESS,  THIRD  SESSION. 


STATEMENTS  OE  INTERSTATE  COMMERCE  COMMISSIONERS  MARTIN 

A.  KNAPP,  JUDSON  0.  CLEMENTS,  CHARLES  A.  PROUTY, 

JOSEPH  W.  FIFER,  AND  FRANCIS  M.  COCKRELL. 


May  18,  19,  20,  and  22, 1905. 


WASHINGTON: 

GOVERNMENT  PRINTING  OFFICE. 

1905. 


'^•■-"'^^" 


^0^m^ 


mM 


THE   UNIVERSITY 
OF   ILLINOIS 


Return  this  book  on  or  before  the 
Latest  Date  stamped  below. 


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j  L161— H41 


REGULATION  OF  RAILWAY  RATES. 


HEARINGS 


BEFORE   THE 


COMMITTEE  ON  INTERSTATE  COMMERCE 


Ul^ITED   STATES  SEl^ATE, 
IN  SPECIAL  SESSION, 


PURSUANT  TO  SEMTE  RESOLUTION  KO.  288, 

FIFTY-EIGHTH  CONGRESS,  THIRD  SESSION. 


STATEMENTS  OP  INTERSTATE  OOMMEEOE  COMMISSIONERS  MARTIN 

A.  KNAPP,  JUDSON  0.  CLEMENTS,  CHARLES  A.  PROUTY, 

JOSEPH  W.  PIPER,  AND  PRANCIS  M.  COCKRELL. 


May  18,  19,  20,  aud  22,  1905. 


WASHINGTON: 
GOVERNMENT   PRINTING    OFFICE.    ,| 
1905. 


\ 


REGULATION  OF  RAILWAY  RATES. 


3S^  ^    HEARINGS  BEFORE  THE  COMMITTEE  ON  INTERSTATE  COMMERCE, 
1  .         C2  -3.  x/^  UNITED  STATES  SENATE. 

Thursday,  May  28, 1905. 

STATEMENT    OF   INTERSTATE    COMMERCE  COMMISSIONER 

PROUTY. 

The  Chairmax.  I  will  state  that  the  committee  has  invited  the 
members  of  the  Interstate  Commerce  Commission  to  come  before 
them  and  make  any  statement  that  they  see  fit  on  the  pending  ques- 
tion.    Mr.  Knapp,  being  the  chairman,  will  be  heard  first. 

Commissioner  Knapp.  Mr.  Chairman,  when  it  was  understood  that 
the  attendance  of  the  Commission  would  be  desired  on  the  first  part 
of  this  week  one  of  my  associates,  Commissioner  Prouty,  made  an 
engagement  which  compels  him  to  leave  Washington  to-morrow 
morning  for  an  absence  of  some  days.  For  that  reason  I  ask  that  he 
have  the  first  opportunit}^  to  present  any  statement  that  he  desires 
to  make  or  to  answer  an}^  questions  the  members  of  the  committee 
^    may  desire  to  ask. 

'    ■     The  Chairman.    Very  well.     Mr.  Commissioner  Prouty,  you  maij 
;     proceed. 

;         Commissioner  Prouty.  Mr.  Chairman,  the  Commission  is  here  this 
,     morning  because  you,  as  the  chairman  of  the  committee,  requested  it  to 
)     be  here,  and  I  come  here  as  a  member  of  the  Commission  for  that  rea- 
,     son.    Since  these  hearings  began  I  have  been  absent  from  Washington 
I     almost  all  the  time  on  official  business.     My  time  when  in  Washington 
has  been  so  engrossed  that  I  have  had  no  opportunity  to  examine  the 
testimony  given  on  these  hearings.     I  am  not  in  any  way  competent 
to  discuss  it.     I  am  not  competent  to  reph^  to  anything  which  has 
been  said,  and  I  do  not  desire  to  take  up  your  time.     It  would  not  be 
profitable  for  me  to  take  up  your  time  in  any  general  discussion  of 
this  question.     I  am  here,  as  I  indicated,  at  your  request,  and  if  the 
committee  desires  to  ask  me  any  question  in  reference  to  what  has 
been  done,  in  reference  to  what  has  not  been  done,  in  reference  to  why 
it  has  not  been  done  or  why  it  has  been  done,  I  shall  be  glad  to 
answer  that  question,  but  unless  you  have  some  question  to  ask  in  ref- 
erence to  something  I  do  not  care  to  trouble  you. 

Senator  Cullojm^  How  long  have  you  been  a  member  of  the  Com- 
mission ? 

Mr.  Prouty.  I  was  appointed  on  the  Commission  in  December, 
1896.  I  succeeded  Judge  Vesy,  who  succeeded  Commissioner  Walker, 
afterwards  chairman  of  the  Atchison  board. 

Senator  Cullom.  The  committee  has  now  been  taking  testimony 
on  this  subject  for  about  a  month,  and  the  chief  point  about  which 
there  seems  to  be  a  difference  in  the  country,  and  possibly  in  the 
committee — I  do  not  know  how  that  is,  for  we  have  not  made 
known  our  views  to  each  other — is  the  question  of  whether  the 
Commission,  either  as  it  is  or  as  we  might  see  proper  to  make  it 
hereafter,  should  be  given  powers  in  addition  to  what  it  already  has, 
and  on  being  called  upon  by  a  locality,  or  at  the  complaint  that  a 

3611:36  ' 


4  KEGULATIO]Sr    OF   EAILWAY   KATES. 

rate  was  not  satisfactory,  and  the  Commission  should  respond  to  the 
call  and  determine  that  the  rate  was  not  reasonable  and  so  declare 
and  order,  that  in  addition  to  that  the  Commission  should  have  the 
power  to  determine  what  rate  would  be  reasonable  and  enforce  its 
order  on  that  decision. 

Mr.  Proutt.  I  do  not  understand  that  the  Commission  at  the 
present  time  has  any  power  in  the  premises.  In  my  view  of  it  the  de- 
fect in  the  present  law  is  that  neither  the  Commission  nor  the  court 
nor  anybody  else  has  any  power  to  say,  with  respect  to  the  future, 
whether  a  rate  is  reasonable  or  unreasonable — whether  a  discrimina- 
tion is  due  or  undue — and  therefore  we  have  no  power  to  make  any 
order  in  the  premises. 

Senator  CuLLOii.  Well,  ought  you  to  have? 

Mr.  Prouty.  My  views  on  that  subject  have  been  stated  in  repeated 
reports  to  Congress. 

Senator  Cullom.  We  would  like  to  hear  you  discuss  that  question. 

Mr.  Prouty.  Mr.  Senator,  I  believe  this:  I  have  said  it  a  great 
many  times  and  I  can  say  it  in  a  word  again,  that  there  must 
be,  and  esj)ecially  in  view  of  the  combined  railway  influence  at  the 
present  time,  some  tribunal  somewhere  which  has  power  to  judge 
between  the  railway  and  the  public.  I  do  not  mean  by  that  that 
I  should  have  or  that  anybody  else  should  haA^e  any  power  over  the 
property  of  the  railway.  I  think  the  railways  should  make  their  own 
rates.  I  think  the}-  should  be  allowed  to  develop  their  own  business. 
I  have  never  advocated  any  law  and  I  am  not  in  favor  of  any  law 
which  would  put  the  rate-making  power  into  the  hands  of  any  com- 
mission or  any  court.  AVhile  it  may  be  necessar}^  to  do  that  some 
time,  while  that  is  done  in  some  States  at  the  present  time,  while  it  is 
done  in  some  countries,  I  am  opposed  to  it,  and  I  could  give,  if  it 
were  material,  the  reasons  why  I  am  opposed  to  it.  You  have  heard 
them  already  from  other  parties. 

Senator  Cullom.  We  would  like  to  hear  them  from  j^ou. 

Mr.  Prouty.  And  I  say  this,  that  there  must  be  some  tribunal 
which  can  determine  whether  the  railroad  has  so  used  its  property  as 
to  destroy  my  property.  If  a  railroad  having  the  absolute  monopoly 
imposes  upon  me  an  unjust  and  an  unreasonable  rate  it  takes  my 
property.  If  the  railroad,  having  power,  imposes  a  discrimination 
which  shuts  up  my  coal  mines  or  shuts  down  my  mill  it  takes  my 
property.  Now,  there  must  be  a  tribunal  somewhere  which  can 
judge  between  me  and  the  railroad,  which  can  say  whether  the  rail- 
way is  using  or  has  used  its  property  in  a  legitimate  way  with  respect 
to  my  rights  and  my  property  rights.  Now,  as  a  matter  of  fact  I  go 
a  little  bit  further.  I  say  that  the  only  way  in  which  the  public  can 
be  protected  is  by  acting  directly  upon  the  railroad  rates.  The  thing 
which  hurts  is  the  rate.  The  thing  which  must  be  acted  upon  is  the 
rate.  In  some  way  or  other  you  must  revise  the  action  of  the  traffic 
manager.  Now,  if  you  can  do  that  by  a  court,  all  right.  As  I  under- 
stand the  Constitution  of  the  United  States  it  can  not  be  done  by  a 
court.  A  court  has  no  power  and  can  be  given  no  power  to  determine 
a  rate  for  the  future.  Therefore,  you  must  bestow  that  power,  you 
must  confer  that  power  upon  some  commission.  Now,  when  you  ask 
what  commission  and  how  that  commission  should  be  constituted 
and  to  what  extent  the  orders  of  that  commission  should  be  reviewed 


EEGULATION    OF   RAILWAY   RATES.  5 

you  come  to  a  field  about  which  my  awn  ideas,  although  I  have 
thought  a  gTeat  deal  about  the  subject,  are  not  altogether  clear.  The 
Interstate  Commerce  Commission  at  the  present  time  is  an  executive 
body.  It  is  charged  with  the  duty  within  certain  limits  of  executing 
this  law.     It  is  our  duty  to  enforce  the  criminal  features  of  the  law. 

Now,  I  am  perfectly  clear  in  my  own  way  that  those  powers  should 
be  taken  away  from  the  Interstate  Commerce  Commission.  In 
the  first  place,  a  body  of  five  men  is  too  cumbersome  a  body  to  act 
as  an  executive.  It  does  not  do  things.  It  does  not  get  anywhere. 
In  the  next  place,  I  do  not  think  joii  ought  to  combine  in  the  same 
tribunal  or  the  same  body  the  executive,  the  administrative,  and  the 
judicial  functions.  That  is  my  attitude  as  a  Commissioner.  If  it 
is  my  dut}^  as  a  Commissioner  to  investigate,  to  unearth  criminal 
violations  of  the  law,  I  think  I  am  very  likely  to  get  into  a  frame  of 
mind  which  unfits  me  to  dispassionately  pass  upon  the  rates  made 
by  the  defendant;  so  I  say  now,  and  I  have  always  said,  that  you 
should  take  away  from  the  Interstate  Commerce  Commission  and 
put  either  in  the  Department  of  Justice  or  in  the  Department  of 
Commerce  and  Labor  what  I  may  call  the  executive  functions  of  the 
Commission.  Now,  the  Commission  has  certain  judicial  functions. 
It  is  allowed  in  certain  cases  to  award  damages.  I  think  those 
•judicial  functions  should  be  taken  aAvay  from  the  Commission.  I  do 
not  think  that  the  Commission  as  now  constituted,  hearing  cases  as 
it  hears  them,  receiving  testimony  as  it  receives  testimony,  ought  to 
be  charged  with  the  judicial  duty  of  trying  a  damage  suit.  There 
are  certain  instances  where  the  only  thing  to  be  done  is  to  make  a 
computation  between  the  rate  charged  and  the  rate  paid,  wdiere  the 
Commission  might  with  propriety  make  the  computation  and  make 
the  order;  but  where  the  process  goes  further,  where  it  becomes 
necessary  to  determine  damages,  to  award  damages,  the  work  of  the 
Commission  is  apt  to  be  unsatisfactory.  "Wlien  it  is  done,  it  amounts 
to  nothing.  The  order  of  the  Commission  is  merely  prima  facie. 
The  same  suit  must  be  tried  over  again,  and  I  believe  it  would  be 
better  to  try  that  suit  in  the  first  instance  in  the  courts.  It  is 
quite  likely  that  you  ought  to  permit  suits  to  be  tried  in  the  State 
courts  for  violations  of  this  statute,  if  that  can  be  done,  and  I 
rather  think  it  could  be.  A  man,  perhaps,  ought  not  to  be  required 
under  all  circumstances  to  go  into  the  Federal  court;  but  you  gain 
nothing  by  his  bringing  the  suit  in  the  first  instance  before  the  Com- 
mission, and  it  seems  to  me  that  you  should  take  away  the  executive 
and  the  judicial  duties,  and  leave  the  Commission  with  simply  its 
administrative  duties. 
-  Senator  Ctjllom.  You  have,  I  think,  taken  up  these  damage  cases, 
as  you  call  them,  and  disposed  of  them,  have  you  not,  as  a  Com- 
mission ? 

Mr.  Peouty.  Yes ;  the  Commission  heard  before  I  came  on  to  the 
Commission  the  case  of  the  Independent  Refiners'  Association  putting 
in  issue  rates  on  petroleum  from  certain  points  in  Pennsylvania  to 
various  points  in  New  England.  In  that  case  the  Commission 
awarded  damages  to  a  considerable  amount.  Suit  was  brought  in  the 
circuit  court  and  the  complainant  recovered  his  damages.  That 
matter  was  taken  up  to  the  circuit  court  of  appeals,  and  the  circuit 
court  of  appeals  has  just  reversed  the  decision  of  the  circuit  court 
and  virtually  held  that  no  damages  can  be  recovered.     Now,  in  that 


6  KEGULATIOX    OF    RAILWAY   EATES. 

case  it  would  have  been  very  much  better  for  the  complainant  if  he 
had  been  obliged  to  first  go  into  court. 

Senator  Cullo3i.  Did  the  court  decide  that  no  damages  could  be 
recovered  on  the  merits  or  on  account  of  the  fact  that  the  Commission 
had  no  foundation  for  the  case? 

Mr.  Prouty.  It  would  not  be  profitable  for  me  to  go  into  that  fea- 
ture of  the  case;  but  the  court  decides  for  a  great  many  reasons 
that  they  can  not  recover — not  because  the  Commission  made  any 
error  in  determining  whether  the  rate  was  unreasonable  or  reason- 
able, because  that  question  did  not  go  to  a  jury,  but  because  the  Com- 
mission awarded  damages  against  a  receiver  when  they  ought  not  to 
have  been  awarded,  and  for  other  reasons  of  that  kind. 

Senator  Cullom.  You  have  the  power  now,  as  a  Commission,  on 
complaint  to  investigate  and  determine  whether  the  charges  were 
reasonable  or  unreasonable,  and  when  you  determine  that  they  are 
unreasonable  you  make  an  order  to  that  effect,  do  you  not,  or  what 
do  you  do  ? 

Mr.  Prouty.  These  questions  arise  before  us  in  a  great  many  ways. 
There  are  a  great  man}^  different  kinds  of  questions.  There  is  the 
question  pure  and  simple,  Is  the  rate  unreasonable?  There  is  the 
question,  Is  this  a  discrimination  between  localities?  There  is 
the  question.  Is  this  a  discrimination  against  commodities?  I  be- 
lieve that  in  every  case  the  ultimate  question  reduces  itself  to  this: 
AATiat  shall  the  railroad  charge  for  the  future?  I  think  that  is  true 
in  ever}^  case.  Now,  we  have  just  gotten  back  from  Chicago,  and  we 
have  heard  a  series  of  cases  there,  and  I  might  take  those  cases  as 
illustrations.  One  case  involved  refrigeration  charges  on  peaches, 
plums,  and  grapes  shipped  from  Michigan.  The  only  question  in 
that  case  is  the  amount  of  the  refrigeration  charge. 

Senator  Citllo^i.  Was  that  against  the  railroad  or  against  the  pri- 
vate car  line? 

JSIr.  Prouty.  Well,  the  railroads  were  brought  in  as  parties  and 
the  private  car  lines  were  brought  in  as  parties.  If  we  make  any 
order  it  must  be  made  against  the  railroad,  and  I  think  the  Com- 
mission will  be  disposed  to  hold  that  the  refrigeration  charge  is  a 
part  of  the  transportation  charge  which  the  railroad  must  publish 
and  for  Avhich  it  is  responsible;  but  we  have  no  power  to  say  what 
that  refrigerator  charge  shall  be.  Our  only  power  is  to  say  that  the 
refrigeration  charge  is  unreasonable,  and  I  desire  to  call  the  atten- 
tion of  the  committee  to  the  fact  that  the  Supreme  Court  has  never 
yet  decided  that  we  had  the  power  to  say  that. 

Senator  Cullom.  Even  that  they  were  unreasonable? 

Mr.  Prouty.  No;   not  as  applied  to  the  future. 

Senator  Dollb^er.  Do  you  have  an  additional  power  to  compute 
and  find  the  damages  that  they  have  suffered  by  reason  of  that  viola- 
tion of  law  in  the  same  proceedings  ? 

Mr.  Prouty.  We  do,  not  exactly  in  the  same  proceeding,  but  in 
the  same  connection,  compute  the  damages  which  a  shipper  has  sus- 
tained between  the  payment  of  what  we  find  to  be  a  reasonable  rate 
and  the  payment  of  whatever  rate  was  paid. 

Senator  Dolliver.  Does  the  original  interstate-commerce  law  allow 
that  to  be  done  in  the  same  proceedings? 

Mr.  Prouty.  They  are  really  two  distinct  proceedings,  and  the 


EEGULATION    OF   EAILWAY   KATES.  7 

orders  are  two  distinct  orders.  The  order  to  cease  and  desist  from 
making  a  certain  charge  must  be  enforced  in  a  court  of  equity  and 
the  order  to  make  reparation  must  be  enforced  in  a  court  of  law, 
where  a  jury  trial  can  be  had.  Therefore  the  Commission  makes  two 
separate  orders.  We  make  one  order  to  cease  and  desist  and  another 
order  for  reparation. 

Senator  Dollivt^r.  If  you  pass  both  orders  over  to  the  court  in  the 
same  proceeding 

Mr.  Prouty.  Both  orders  are  made  in  the  same  proceeding.  A 
proceeding  to  enforce  those  orders  would  not  be  brought  in  the  same 
proceeding  in  court.  One  would  be  a  proceeding  in  equity  and  the 
other  would  be  a  proceeding  before  a  jury.  As  I  started  to  say,  you 
take  this  bunch  of  cases  that  we  heard  in  Chicago,  and  in  every  single 
case  the  question  is,  Wliat  rate  shall  be  charged  for  the  future  ?  This 
Michigan  case  was  one.  Now,  another  case  was  this:  The  mills  in 
western  Nebraska  grind  corn  meal,  which  they  use  in  the  Northwest. 
The  corn  out  of  which  they  grind  it  is  raised  in  Nebraska.  The  rate 
on  corn  and  corn  meal  from  Nebraska  to  the  Northwest  has  always 
been  the  same.  Recently  the  rate  on  corn  has  been  reduced  without 
a  corresponding  reduction  of  the  rate  on  corn  meal.  Now,  the  Ne- 
braska miller  alleges  that  the  reduction  of  the  rate  on  corn  without  a 
corresponding  reduction  of  the  rate  on  corn  meal  puts  him  out  of 
business.  His  mill  was  built  to  grind  for  that  territory.  If  he  can 
not  grind  for  that  territory,  it  virtually  amounts  to  a  destruction  of 
his  mill,  the  confiscation  of  his  property.  Now,  there  is  no  way  in 
which  you  can  decide  that  question  except  by  determining  what  rate 
shall  be  applied  for  the  future. 

Senator  Dolltter.  Could  you  not  get  an  order  of  court  requiring 
that  discrimination  between  those  particular  descriptions  of  traffic 
shall  cease  ? 

Mr.  Prouti'.  Suppose  the  court  Avere  of  the  opinion  that  the  dif- 
ferential of  10  cents  was  too  wide,  but  that  a  differential  of  5  cents 
might  properly  be  applied.     What  order  would  the  court  make? 

Senator  Dolliver.  It  would  depend  on  the  proceeding.  Suppose 
the  complaint  was  that  any  discrimination  in  excess  of  5  cents,  or  any 
discrimination  at  all,  was  illegal.  Could  that  be  brought  before  the 
court  by  a  direct  proceeding? 

Mr.  Prouty.  If  the  complaint  Avas  that  any  discrimination  at  all 
was  illegal,  and  if  the  courts  Avere  of  the  opinion  that  there  ought 
to  be  no  discrimination  at  all,  I  am  not  prepared  to  say  that  the  court 
might  not  enjoin  the  making  ©f  a  discrimination. 

Senator  Doi.liver.  Has  that  form  of  proceeding  eA^er  been  adopted 
by  the  Commission  in  cases  of  complaint  about  discriminations  be- 
tween these  descriptions  of  traffic? 

Mr.  Prouty.  I  do  not  think  so.  I  do  not  see  that  anything  would 
be  gained  by  adopting  that  form  of  jDroceeding. 

Senator  Dolliver.  It  Avould,  if  the  court  Avould  make  an  order 
requiring  the  discrimination  to  cease,  and  it  would  appear  to  be  a 
fairly  effective  Avaj^  to  reach  it. 

Mr.  Prouty.  Suppose  the  railroad  ought  to  have  the  right  to  make 
that  discrimination  of  5  cents  and  the  court  ordered  it  not  to  make 
any  discrimination  at  all,  would  that  be  just  to  the  railroad  ? 

Senator  Dollwer.  You  would  not  suppose  the  court  would  make 
such  an  order  in  that  case. 


8  KEGULATION    OF   EAILWAY   EATES. 

Mr.  Proutt.  Then  the  court  makes  no  orders  to  cease  and  desist, 
and  the  result  is  that  j'^ou  go  along  charging  the  10  cents. 

Senator  Dolli\t]e.  Do  you  say  that  the  court  could  not  make  an 
order  to  cease  and  desist  about  a  discrimination  of  5  cents  ? 

Mr.  Prouty.  Certainly  I  would.  In  order  to  do  that  the  court 
must  determine  the  differential  for  the  future,  must  it  not  ? 

Senator  Dolliver.  I  do  not  desire  to  answer  the  question. 

Mr.  Prouty.  Certainly  I  would  say  that.  That  is  what  the 
Supreme  Court  has  held  with  reference  to  orders  of  the  Commission. 
The  first  order  this  Commission  ever  made  in  respect  to  a  rate  was 
made  in  the  case  of  Evans  against  the  Oregon  Navigation  Company, 
or  the  Oregon  Short  Line — I  forget  which.  The  thing  involved  there 
was  the  rate  on  wheat  from  Walla  Walla  to  Portland.  The  rate  in 
effect  was  30  cents.  The  rate  the  Commission  ordered  was  23|  cents. 
What  the  Commission  did  was  to  order  the  defendant  to  cease  and 
desist  from  charging  more  than  23^  cents.  That  was  the  form  of  the 
order  which  the  Commission  made,  and  it  is  the  form  of  the  order 
which  the  Commission  has  alwaj^s  made.  That  order  was  complied 
with  by  the  railway,  but  the  Supreme  Court  of  the  United  States  has 
since  held  in  subsequent  cases  that  the  Commission  had  no  power  to 
make  that  sort  of  an  order,  because  that  kind  of  an  order  of  necessity 
involved  a  determination  that  23^  cents  should  be  charged  for  the 
future.     Now,  an  order  of  the  kind  that  you  mention 

Senator  Newlands.  In  what  case  was  that  last  decided? 

Mr.  Prouty.  In  all  these  cases.  In  the  Maximum  Kate  Case  the 
form  of  the  order  was  that  the  carrier  should  desist  and  cease  from 
charging  more  than  a  certain  sum.  That  is  the  order  we  always 
make.  Our  order  formerly  was  that  the  carrier  shall  cease  and 
desist  froiti  charging  more  than  the  amount  which  we  determined 
was  reasonable.  At  the  present  time  the  order  is  that  the  carrier 
shall  cease  and  desist  from  charging  the  present  rate,  and  along  with 
that  goes  a  recommendation  as  to  the  rate  which  the  carrier  shall 
charge. 

Senator  Newlands.  Do  I  understand  that  some  of  the  counsel  for 
the  railroads  have  insisted  that  in  the  case  put  by  Senator  Dolliver 
the  court  could  give  full  relief  by  enjoining  a  charge  above  a  certain 
amount,  and  that  that  would  belong  to  the  equity  side  of  the  court  in 
order  to  avoid  a  multiplicity  of  suits  for  damages  and  to  get  ade- 
quate relief?  Of  course,  if  that  is  so,  that  power  would  be  exercised 
by  the  court  entirely  regardless  of  the  question  as  to  whether  or  not 
the  Commission  had  the  power  to  fix  the  rates  for  the  future.  The 
remedy  there  would  be  to  prevent  an  irremedial  injur}'  and  to  Dre- 
vent  a  multiplicity  of  suits.  That  is  the  contention,  I  understand  it, 
of  some  of  the  lawyers  of  the  railroads.  Is  not  that  your  under- 
standing ? 

Mr.  Prouty.  The  court  in  Mississippi  decided  that  the  court  had 
no  such  jurisdiction.  Judge  Spear  decided  in  Georgia  that  the  court 
had  that  jurisdiction,  and  the  court  decided  in  the  Missouri  Pacific 
Case  that  under  the  statute — under  the  Elkins  bill — an  action  would 
now  lie  in  the  name  of  the  United  States  to  restrain  a  discrimination, 
but  all  that  does  not  reach  the  point.  The  question  is.  Can  the  court 
apply  a  remed}^?  Now,  my  proposition  is  that  the  court,  by  the  deci- 
sion of  the  Supreme  Court  of  the  United  States,  has  no  right  to  fix 
a  rate  for  the  future.    There  is  no  question  about  that.    That  has  been 


EEGULATION    OF    RAILWAY   RATES.  9 

decided.  It  must  be  accepted  as  axiomatic.  My  second  proposition 
is  that  the  court  can  not  fix  that  differential  without  fixing  a  rate 
for  the  future.  If  the  court  says  that  for  the  future  the  carrier  shall 
be  enjoined  from  charging  more  than  5  cents  difference  between  corn 
and  corn  meal,  it  determines  that  5  cents  shall  be  the  differential  for 
the  future,  and  that  thing  the  court  has  no  power  to  do. 

The  Chairiman.  AAHiiat  would  5^ou  suggest  as  the  remedy  right 
there;  what  amendment  would  you  put  in  the  existing  law  to  make 
the  enforcement  of  that  effective? 

Mr.  Prouty.  The  trouble  now  is  that  you  are  endeavoring  to  ad- 
minister this  law  by  the  court.  That  can  not  be  done.  You  may  take 
every  case  that  stands  on  the  docket  of  the  Interstate  Commerce 
Commission,  you  may  take  every  case  that  has  been  decided  by  the 
Interstate  Commerce  Commission  for  the  last  eight  years,  since  I  have 
been  on  that  Commission,  and  the  thing  can  not  be  corrected  unless 
3^ou,  in  effect — you  might  by  indirection — fix  the  rate  for  the  future, 
and  you  must  create  a  commission  and  you  must  give  it  that  power. 

The  Chairman.  Would  you  leave  the  right  to  review  the  finding 
and  judgment  of  the  Commission? 

Mr.  Prouty,  I  have  never  advocated  the  exercise  of  that  power  by 
the  Commission  without  the  right  to  review. 

The  Chairman.  Wlien  the  court  reviews  it  and  comes  to  a  conclu- 
sion, would  not  that  indirectly  fix  the  rate? 

.  Mr.  Prouty.  Just  what  the  court  can  do  in  that  matter  is  an  em- 
barrassing question,  and  a  question  which  no  man  can  answer  with 
very  great  certainty.  The  Attorney-General  has  told  you  gentle- 
men, I  think,  that  the  court  has  no  power  to  review  an  order  of  the 
Commission.  Now,  I  entirely  agree  with  that  proposition.  I  have 
always  insisted  that  the  Commission  must,  in  the  first  instance,  fix 
the  rate.  It  has  always  seemed  to  me  that  a  court  could  review  the 
decision  of  the  Commission. 

The  Chairiman,  In  the  first  instance  the  railroad  fixes  the  rate, 
and  you  then  review  that, 

Mr,  Prouty,  Yes, 

The  Chairman.  You  say  the  Commission  fixes  the  rate? 

Mr.  Prouty.  Our  power  is  this,  or  ought  to  be  this:  The  fixing  of 
a  rate  is  an  administrative  duty.  The  altering  of  that  rate  is  an  ad- 
ministrative duty.  Now,  an  administrative  duty  can  not  be  dis- 
charged by  the  court.  The  court  may  determine  whether  a  rate  is 
reasonable  or  unreasonable  for  certain  purposes.  It  may  determine 
whether  a  rate  is  reasonable  if  I,  having  paid  the  rate,  sue  the  rail- 
road company  to  recover.  It  may  determine  that;  it  may  submit 
that  to  a  jury.  It  may  determine  whether  the  rate  is  reasonable  or 
unreasonable  under  the  fourteenth  amendment  to  the  Constitution  of 
the  United  States — that  is,  for  the  purpose  of  enforcing  the  provisions 
of  that  amendment.  It  has  never  been  decided  by  any  court — the 
contrary  has  been  decided,  as  I  understand  it — that  the  court  has 
power  to  determine  whether  a  rate  is. reasonable  or  unreasonable  for 
the  purpose  of  fixing  that  rate  for  the  future.  Now,  I  say  it  is  a 
very  embarrassing  question — it  is  a  very  doubtful  question — what  the 
power  of  the  court  is  under  the  fourteenth  amendment.  That  amend- 
ment provides  that  no  person  shall  be  deprived  of  his  property  with- 
out due  process  of  law.  The  railway  rate  is  property.  It  is  all 
the  property  that  the  railway   has.     The  rest   of  its   property  is 


10  REGULATION    OF    RAILWAY    RATES. 

good  for  nothing  unless  it  can  charge  a  rate.  Now,  it  has  always 
seemed  to  me  that  when  a  rate  was  fixed,  if  that  rate  was  an  unrea- 
sonable rate  it  deprives  the  railroad  company  of  its  property  pro 
tanto.  It  is  not  necessary  that  you  should  confiscate  the  property  of 
a  railroad;  it  is  not  necessary  that  you  should  say  that- it  shall  not 
earn  3  per  cent  or  -i  per  cent.  "Wlien  you  put  in  a  rate  which  is  inher- 
ently unreasonable  you  have  deprived  that  company  of  its  rights,  of 
its  property,  and  the  circuit  court  of  the  United  States  has  jurisdic- 
tion under  the  fourteenth  amendment  to  restrain  that. 

Senator  Dolliver.  Does  that  view  correspond  with  the  decisions  of 
the  court  ? 

Mr.  Prouty.  That  is  as  I  understand  it. 

Senator  Dolliver.  I  think  the  Attorney-General  says  that  the 
review  of  the  rates  does  not  go  to  the  question  of  whether  it  is  reason- 
able or  not,  but  goes  simply  to  the  question  of  whether  it  confiscates 
the  railroad  company's  property. 

Mr.  Prouty.  Well,  I  read  the  opinion  of  the  Attorney-General 
hastily.  Of  course  I  have  no  desire  to  assert  any  opinions  in  opposi- 
tion to  that  of  the  Attorne^^-General,  but  I  have  looked  at  these  cases 
a  great  many  times  and  I  can  only  come  to  this  conclusion,  that  a  rail- 
road company  is  entitled  to  charge  a  fair  and  reasonable  rate.  It  is 
entitled  under  the  fourteenth  amendment  to  charge  a  fair  and  reason- 
able rate,  and  if  any  order  of  a  commission,  if  any  statute  of  a  State 
legislature,  takes  away  that  right,  the  fourteenth  amendment  pro-, 
tects  the  railwa}^  company.  To  contniue,  the  legislature  has  certain 
powers  over  the  rate.  For  example,  the  legislature  may  say  to  a 
railway  company,  you  shall  create  no  discrimination  between  locali- 
ties. The  legislature  may  say  to  a  railway  company,  you  shall  in 
all  cases  charge  no  less  for  a  long  haul  than  \^ou  clo  for  a  short  haul. 
Now,  when  that  has  been  said  the  railway  company  must  comply 
with  that  enactment  of  the  legislature. 

The  Supreme  Court  held  that  the  State  of  Kentucky  had  a  right 
to  say  to  the  railroads  in  that  State,  with  respect  to  traffic  within  the 
State,  that  the  long  and  short  haul  clause  should  be  absoluely 
observed.  The  railroads  came  to  the  court.  They  said :  If  you  com- 
pel us  to  observe  this  law,  it  ruins  us;  it  confiscates  our  property. 
But  the  court,  as  I  understand  it,  rejected  that  argument  and  said: 
It  makes  no  difference;  the  legislature  of  Kentucky  may  prescribe 
that  rule  and  you  must  obey  it.  Now,  I  take  it  that  the  Congress 
of  the  United  States  may  say,  with  respect  to  interstate  transporta- 
tion, that  in  no  case  should  less  be  charged  for  the  long  haul  than 
for  the  short  haul.  It  would  be  a  very  foolish  thing  to  say ;  it  would 
produce  a  very  disastrous  effect  upon  railways  in  some  parts  of  this 
country ;  but  I  think  Congress  might  say  it,  and  if  Congress  did  say 
it  the  railways  would  be  obliged  to  comply  with  it.  Now,  there  is 
another  thing  that  Congress  may  do.  It  exercises  and  can  exercise 
a  very  wide  supervisory  power  over  rates.  For  example,  a  rail- 
road company  can  afford  to  make  a  lower  rate  for  100  pounds,  if 
it  receives  a  train  load  a  day  from  a  factory,  than  it  can  if  it  receives 
a  single  carload  a  day  from  a  factory.  Nevertheless  I  think  that 
Congress,  or  a  commission  acting  under  the  authority  of  Congress, 
might  say  that  the  railway  shall  accord  the  same  rates  whether  the 
shipment  is  in  one  carload  or  in  fifty  carloads.     Otherwise  you  con- 


REGULATION    OF    RAILWAY    RATES.  11 

centrate  the  business  of  this  country  in  the  hands  of  a  few  large  cor- 
porations— certain  kinds  of  business. 

Senator  Dolliver.  Do  joii  thinlv  tliat  would  be  a  wise  provision 
of  law  ? 

Mr.  Prouty.  That  no  lower  rate  should  be  made  for  a  train  load  ? 
Well,  now  with  respect  to  that,  the  Commission  has  held  that  such 
is  the  law  now.  The  Supreme  Court  of  the  United  States,  as  I  un- 
derstand it,  has  held  with  respect  to  passenger  traffic  that  such  is  not 
the  law.  In  point  of  fact,  the  railroads  of  this  country  do  ordinarily 
apply  the  same  rate  per  hundred,  pounds,  whether  the  traffic  moves 
in  carloads  or  in  train  loads. 

Senator  Dolliver.  But  they  do  not  go  below  a  carload  ? 

]Mr.  Prouty.  ISTo  ;  if  they  were  to  apply  any  different  rule  it  would 
create  an  insurrection  which  you  gentlemen  would  hear  from  from  all 
parts  of  the  country.  I  think  there  are,  however,  certain  cases  in 
which  railroads  ought  to,  and  may,  with  perfect  propriety,  make  a 
lower  rate  by  the  train  load  than  by  the  carload,  and  I  believe  they 
ought  to  have  that  right.  Now,  it  seems  to  me  that  Congress  would 
have  the  power  to  say — they  may  say  it  by  absolute  enactment  or  they 
may  delegate  that  power  to  a  Commission — ordinarily  you  shall 
make  the  same  rate  per  100  pounds,  whether  one  carload  or  fifty,  but 
you  may,  under  these  peculiar  circumstances  and  conditions,  make  a 
lower  rate  bj^  the  train  load  than  by  the  carload. 

Senator  Dolliver.  Do  you  have  in  mind  raiy  condition  of  that  sort  ? 

Mr.  Prouty.  Yes;  the  transportation  of  live  stock.  I  think  there 
are  many  instances  where  railroads  might,  with  propriety,  make  a 
lower  rate  for  a  train  load  of  live  stock  than  they  make  for  a  single 
carload  of  live  stock.  I  think  it  would  be  for  the  interest  of  the  ship- 
per of  live  stock  if  they  had  that  privilege.  I  think  in  many  instances 
the  railroads  should  have  the  right  to  make  a  lower  rate  for  the 
transportation  by  the  railroad  of  a  train  load  of  perishable  fruit  or 
other  commodity  than  it  makes  for  a  single  carload,  and  it  is  for  the 
interest  of  the  public  that  they  should  have  that  right.  Take  an- 
other illustration:  A  railroad  company  can  transport  kerosene  oil 
or  petroleum  much  more  cheaply  by  the  gallon  in  a  tank  car  than  in 
a  barrel.  Nevertheless,  I  think  the  people  of  this  country  might, 
through  their  Congress  or  through  a  commission,  say  that  the  rail- 
roads of  this  country  shall  extend  the  same  rates  by  the  gallon, 
whether  kerosene  oil  is  transported  in  a  tank  car  or  by  the  barrel. 

Senator  Cullom.  Do  you  think  those  provisions  ought  to  be  put 
m  the  statute? 

Mr.  Prouty.  I  am  not  saying  now  that  they  ought  to  be  put  into  a 
statute.  I  am  illustrating  to  you  the  power  which  Congress  has 
and  which  the  court  can  not  refuse.  I  think  that  Congress  may  say 
that  a  railway  shall  earn  less  in  proportion  to  the  service  from  the 
transportation  of  coal  than  it  earns  from  the  transportation  of  some- 
thing else.  NoAV,  within  those  limits  the  power  of  Congress  is 
supreme.  Within  those  limits  the  power  of  a  commission  created 
by  Congress  is  supreme,  and  with  those  things  the  court  can  not 
interfere.  The  court  can  say,  on  the  whole  you  are  not  giving  to  this 
railroad  company  a  reasonable  return ;  but  the  court  can  not  say  that 
simply  because  we  have  required,  or  Congress  has  required,  a  railroad 
to  transport  coal  for  less  in  proportion  to  service  than  silk  that  the 


12  EEGULATIOISr    OF    KAIL  WAY   EATES. 

rate  on  coal  is  unreasonable.  In  my  view  of  the  matter  the  power  of 
the  court  is  something  like  this:  The  making  of  a  rate  is  a  legis- 
lative act  in  essence.  The  court  has  the  same  power  over  that  leg- 
islative act  that  it  has  over  an}^  other  legislative  act.-  Just  as  it  can 
declare  a  law  which  Congress  enacts  unconstitutional,  sO  it  can  declare 
a  rate,  j)ut  into  effect  by  Congress  or  put  into  effect  by  the  Commission, 
void.  If  Congress  were  to  enact  that  the  Baltimore  and  Ohio  Rail- 
road should  transport  passengers  from  Washington  to  Baltimore  for 
5  cents  apiece,  I  take  it  that  is  an  unconstitutional  act.  That  does 
not  allow  the  railroad  proper  remuneration  for  its  service.  That 
could  be  set  aside  b}'  the  court.  But  if  Congress  were  to  enact  that 
service  should  be  rendered  for  40  cents  apiece,  it  is  not  at  all  clear, 
although  the  rate  would  be  too  low,  that  it  could  be  set  aside  by  the 
court.  That  may  be  as  much  as  the  railroads  get  at  present  on  the 
whole.  It  seems  to  me  that  a  court  should  presume  in  favor  of  a 
rate  exactly  what  it  presumes  in  favor  of  a  statute.  It  should  presume 
it  is  reasonable;  but  if  it  clearly  appears  to  be  unreasonable  it  should 
set  it  aside,  and  should  do  that  although  the  railroad  is  making  i  00 
per  cent  on  its  investment.  From  what  I  have  seen  of  the  operation 
of  this  right  under  the  fourteenth  amendment  and  the  acts  of  State 
commissions  I  have  felt  that  it  did  not  afford  to  the  railroad  the  full 
measure  of  protection  which  it  deserved,  and  I  have  advocated  the 
creation  of  a  special  court,  which  should  be  an  expert  court,  upon  tlie 
theory  that  the  court  may  exercise,  if  it  were  given  the  power  to 
review  the  lawfulness  of  a  rate,  some  additional  power  to  what  it 
could  exercise  under  the  fourteenth  amendment. 

Senator  Dolliver.  Could  we,  by  creating  a  special  court,  give  to  it 
am'^  special  powers  that  could  not  be  by  law  conferred  upon  the  ex- 
isting judiciar}^  of  the  countrj-? 

Mr.  Prouty.  As  a  matter  of  theor}^,  as  a  matter  of  course,  you 
could  not,  but  as  a  lawyer  you  know  that  the  courts  do  in  the  process 
of  time  some  things  that  it  was  not  originally  intended  they  should 
do. 

Senator  Dolliver.  If  I  could  see  the  same  latitude  in  the  jurisdic- 
tion of  a  court  in  hearing  one  of  these  appeals  from  the  order  of  the 
Commission  that  3^011  have  expressed  there,  it  would  greatly  sim- 
plify this  problem;  but  the  way  it  has  been  presented  to  us  is  that 
the  court  would  consider  nothing  but  reasonable  earnings,  the  rea- 
sonable surplus  to  be  laid  up  against  evil  times,  or  a  reasonable  lousi- 
ness administration  of  the  propertj^,  and  confine  itself  to  the  question 
of  whether  the  rates  fixed  by  the  Commission  took  the  property  of 
the  company  without  compensation,  without  due  process  of  law. 

Mr.  Prouty.  If  it  is  too  low  it  does  take  it  without  process  of  law, 
because  the  rate  is  the  property. 

Senator  Dolliver.  No,  the  rate  is  a  mere  expression  of  the  use  of 
the  property ;  and  the  rate  could  be  brought  down  until  the  property 
was  earning  veiw  little — not  enough  to  pay  dividends  and  not  enough 
to  maintain  a  surplus  fund  or  to  keep  up  improvements  or  a  great 
variety  of  expenses  beyond  the  mere  payment  of  dividends  and  still 
be  short  of  taking  the  property.  That  is  the  view  that  has  been  pre- 
sented to  us. 

Mr.  Prouty.  Of  course  the  court  can  not  review  the  order  of  the 
Commission  in  so  far  as  that  order  is  discretionary;    in  so  far  as  it 


kegulatiojST  op  kailway  eates.  13 

is  a  matter  of  judgment;  in  so  far,  in  other  words,  as  it  is  legislative. 
It  can  onh'  review  the  lawfulness  of  the  order;  but  it  has  seemed 
to  me  that  a  special  court,  charged  with  the  duty  of  reviewing  the 
lawfulness  of  the  orders  of  the  Commission,  would  exercise  a  most 
potential  influence  upon  the  rates  of  this  country.  A^Tien  the  Su- 
preme Court  of  the  United  States  decides  that  the  rates  put  in  effect 
by  the  Texas  commission  are  in  violation  of  the  fourteenth  amend- 
ment, they  of  necessity  inquire  whether  those  rates  are  reasonable. 
They  do  not  inquire  with  reference  to  the  future,  but  they  inquire, 
Are  those  rates  reasonable?  When  the  court  inquires  whether  one 
of  the  orders  of  the  Commission  is  justified,  it  must  inquire  whether 
the  rate  is  reasonable  for  the  time  being;  and  while  I  freely  admit 
that  the  thing  accomplished  may  be  an  expression  of  opinion  as  to 
a  rate  to  be  charged  for  the  future  I  have  felt  that  under  that  kind 
of  a  provision  the  jurisdiction  would  be  exercised  by  a  court.  It 
might  not.  Your  opinion  is  worth  more  than  mine.  I  have  simply 
given  to  you  the  impression  which  I  have  had. 

The  Chairiman.  Where  do  interstate  railroads,  by  combination  or 
consolidation  of  lines  in  three  or  four  States,  making  it  one  combina- 
tion, get  the  j)ower  to  charge  rates. 

Mr.  Prouty.   I  do  not  know  that  I  understand. 

The  Chairman.  Every  road  is  incorporated  originally  in  a  State, 
and  by  uniting  two  roads  or  three  roads  or  four  roads  in  several  States 
we  get  an  interstate  railroad. 

Mr.  Prouty.   Yes. 

The  Chairman.  Now,  the  power  to  charge — the  franchise — the 
power  to  make  the  rate,  comes  from  what  source? 

Mr.  Prouty.  Why,  each  railroad  is  chartered  by  the  State,  and  it 
is  allowed  to  charge  a  reasonable  rate  in  that  State.  In  the  next 
State  it  is  chartered  and  given  the  same  power.  Now,  when  you  put 
those  two  lines  together  that  power  is  exercised  in  the  State  of  Illinois 
under  the  power  granted  there  and  in  the  State  of  Indiana  under 
the  power  granted  by  that  State.  The  States,  in  forming  this  com- 
pact, which  makes  the  United  States  of  America,  have  given  up 
certain  of  their  powers  to  the  Federal  Government.  They  have  given 
up  to  the  Federal  Government  the  power  over  interstate  commerce  on 
those  railroads. 

The  Chairiman.  They  surrender  the  power  when  they  allow  the 
combination — that  is,  as  to  the  interstate  charges  and  the  operation 
of  the  roads. 

Mr.  Prouty.  I  do  not  think  the  State  could  decline  to  allow  the 
interstate  movement. 

The  Chairman.  The  States  can  not  inquire  into  or  correct  a 
through  rate. 

Mr.  Prouty.  No  ;  that  must  be  done  by  Congress. 

The  Chairman.  And  Congress  gets  that  power  how  ? 

Mr.  Prouty.  By  delegation  from  the  States,  under  the  commerce 
clause.  The  States  have  said  in  the  Constitution,  by  subscribing  to 
it,  that  Congress  shall  have  the  power  over  interstate  commerce. 
They  have  thereby  given  up  the  power  which  they  might  otherwise 
exercise  over  a  railroad  or  over  interstate  transportation. 

The  Chairman.  This  combination  and  consolidation  which  is  per- 
missible under  the  laws  makes  an  interstate  road.  Is  that  a  legisla- 
tive act? 


14  EEGULATIO]Sr    OF    BAIL  WAY   EATES. 

Mr.  Peouty.  You  mean  the  making  of  a  rate? 

The  Chairman.    Yes. 

Mr.  Prouty.  Certainly.  I  say  a  legislative  act — it  is  an  adminis- 
trative act. 

The  Chairman.  It  is  a  legislative  act  so  far  as  the  power  is  derived 
from  some  source  to  fix  it. 

Mr.  Prouty.  If  Congress  should  fix  the  rate,  that  would  be  a  legis- 
lative act. 

The  Chairman.  The  fixing  of  a  rate,  then,  by  an  interstate  road  is 
by  the  consent  of  the  public  ? 

Mr.  Prouty.  Yes. 

The  Chairman.  And  by  the  carrier? 

Mr.  Prouty.  Yes ;  as  I  understand  it; 

The  Chairman.  But  in  the  State,  when  it  incorporates  a  railroad, 
the  power  to  make  rates  is  delegated  and  there  is  a  power  conferred 
upon  the  railroads  to  make  rates  in  the  States. 

Mr.  Prouty.  You  mean  the  United  States  has  conferred  no  power 
which  corresponds  to  the  State? 

The  Chairman.  No. 

Mr.  Prouty.  And  I  say  when  the  State  of  Illinois  creates  one  rail- 
road and  gives  it  that  power,  and  the  State  of  Indiana  creates  an- 
other railroad  and  gives  it  that  power,  that  it  is  not  within  the  power 
of  either  the  State  of  Indiana  or  the  State  of  Illinois  to  say  that  those 
two  roads  shall  not  engage  in  interstate  business  and  make  interstate 
rates,  and  those  interstate  rates  may  be  higher  than  the  sum  of  the  local 
rates.  I  have  before  me  to-da}^  a  complaint  received  from  a  gentle- 
man who  was  traveling  from  Feriiandina,  Fla.,  to  Savannah,  Ga. 
He  bought  a  ticket  from  Fernandina  to  Savannah  and  paid  $5  for  it. 
The  gentleman  who  rode  in  the  same  car  with  him  and  in  the  same 
seat  bought  his  ticket  to  a  little  town  located  on  the  border  between 
Florida  and  Georgia,  and  when  he  got  to  this  little  town  he  got  out 
and  bought  another  ticket,  and  he  got  through  for  $3.28,  I  believe  it 
was. 

The  Chairman.  Now,  how  would  you  constitute  the  Commission, 
and  what  powers  would  you  give  it  in  the  interests  of  the  public  to 
correct  the  evil  abuses  of  extortionate  rates?  "What  powers  would 
you  confer  on  that  Commission  ?  Just  explain  that  to  us  from  your 
large  experience  in  viewing  these  questions. 

Mr.  Prouty.  I  expect  that  if  I  were  to  give  you  my  honest  oj)inion 
about  that  I  would  say  that  you  ought  to  take  away  from  the  Inter- 
state Commerce  Commission  all  its  executive  work.  I  have  already 
said  that.  You  ought  to  take  aAvay  all  its  judicial  work,  and  I  do 
not  know,  but  I  would  say  that  you  ought  to  go  one  step  further. 
Now,  at  the  present  time  the  Interstate  Commerce  Commission  re- 
ceives a  complaint.  That  is  an  informal  complaint.  It  serves  that 
on  the  railroad.  It  endeavors  to  persuade  the  railroad  to  correct 
that  rate.  It  is  our  j^ractice  at  the  present  time  to  say  to  a  com- 
plainant, "  if  the  rate  is  not  corrected,  if  you  desire  to  proceed  with 
this  matter,  we  will  formulate  a  complaint  and  send  it  to  you." 

The  Chair3ian.  Wliether  you  believe  or  not  the  complaint  was  well 
founded  ? 

Mr.  Prouty.  If  I  did  not  believe  the  complaint  was  well  founded, 
if  I  did  not  believe  there  was  a  fair  question,  of  course  I  would  tell 
the  complainant  that  I  did  not  think  he  had  a  case;  but  if  I  thought 


EEGULATION    OF   RAILWAY   EATES.  15 

his  case  was  well  founded,  or  if,  after  I  told  him,  I  did  not  think  he 
had  a  good  case,  and  he  insisted  that  it  was  a  good  case — as  a  com- 
plainant did  the  other  day  (I  wrote  to  him  that  I  did  not  think  he 
had  a  complaint,  and  he  said  he  thought  he  had,  and  he  thought  he 
could  convince  my  associates  that  he  had,  and  would  like  to  have  a 
complaint  sent,  so  I  instructed  to  have  it  sent,  and  I  think  it  has  been 
sent) — but  whenever  a  man  wants  to  proceed  with  his  complaint,  the 
Interstate  Commerce  Commission  always  formulates  his  complaint 
for  him.  The  lawyers  do  not  know  how  to  do  that.  We  just  turn 
it  over  to  our  assistant  secretary,  who  has  a  force  for  that  purpose, 
and  he  formulates  the  complaint  and  has  it  filed.  There  are  some 
cases  in  which  we  go  no  further  than  that.  Where  the  question  is 
one  of  very  general  interest  which,  we  think,  ought  to  be  heard  in 
the  interests  of  the  public,  we  sometimes  furnish  a  lawyer  to  develop 
the  facts  of  the  case.  Now,  I  am  inclined  to  think,  if  you  could 
arrange  this  thing  just  exactly  as  it  ought  to  be  arranged,  you  would 
create  a  bureau  or  a  department — I  do  not  say  that  a  department 
would  be  any  too  large  for  it — which  had  jurisdiction  of  railroads. 

The  Chairman,  A  department  of  railways  ? 

Mr.  Prouty.  a  department  or  a  bureau  of  railways.  You  would 
lay  all  these  informal  complaints  before  the  bureau  of  railways,  and 
if  the  bureau  of  railways  thought  a  complaint  ought  to  be  formulated 
it  would  be  the  duty  of  that  bureau  to  file  a  complaint  with  the  Inter- 
state Commerce  Commission,  and  I  would  create  a  commission  whose 
whole  duty  it  should  be  to  hear  and  decide  those  complaints.  You 
could  not  find  any  men  too  good  for  such  a  commission ;  you  could  not 
find  any  too  impartial  men  for  such  a  commission;  but  I  do  not  see 
any  other  way  in  which  it  could  be  done. 

The  Chairman.  And  have  this  bureau  refer  the  complaint  to  the 
commission  ? 

Mr.  Prouty.  In  my  opinion  you  have  got  finally  to  let  a  commis- 
sion determine  what  these  rates  shall  be,  because  the  court  can  not 
do  it.  In  my  opinion  the  decision  of  the  commission  must  finally 
go  a  long  way  toward  being  taken  as  right.  In  my  opinion  there 
is  no  way  in  which  you  can  protect  the  railroads  of  this  country 
from  an  erroneous  decision  of  that  commission  within  pretty  broad 
limits.  Of  course,  there  are  limits  within  which  you  can  and  limits 
within  which  you  can  not.  Anything  outrageous  can  be  stopped, 
anything  manifestly  wrong  can  be  stopped,  but  anything  that  is  a 
little  wrong  or  partly  wrong  I  do  not  believe  can  be  stopped.  There 
is  no  other  way  to  do  it.  That  is  the  way  they  do  it  in  England, 
that  is  the  way  they  are  doing  it  in  Canada,  and  that  is  the  way  you 
have  got  to  do  it  here ;  and  I  believe  you  ought  to  create  a  commis- 
sion and  give  it  that  duty  and  also  take  awaj^  from  it  entirely  all 
these  duties  which  tend  to  make  a  commission  a  partisan  body,  and 
allow  that  commission  to  decide  those  questions.  There  ought  to  be 
enough  commissioners,  so  that  the  question  can  be  heard  and  decided 
promptly. 

The  Chairman.  If  they  reach  a  conclusion  that  a  rate  was  too 
high,  would  you  have  them  make  a  substitute  rate  that  would  go 
immediately  into  effect  and  make  that  binding  upon  the  railroads, 
and  then  within  certain  limits  have  that  reviewed  or  not  reviewed? 

Mr.  Prouty.  I  think  they  must  have  the  power  to  make  a  rate 


16  REGULATION    OF   RAILWAY   RATES. 

which  is  binding  upon  the  railroad,  unless  it  can  be  reviewed  under 
the  fourteenth  amendment. 

The  Chairman.  As  confiscatory? 

Mr.  Prouty.  Yes. 

The  Chairman.  But  outside  of  that  you  would  not.  allow  it  to  be 
reviewed  ? 

Mr.  Prouty.  I  would  allow  it  to  be  reviewed  if  it  can  be,  but  Sen- 
ator Dolliver  says  that  it  can  not  be.  As  an  Interstate  Commerce 
Commissioner  I  would  a  great  deal  rather  act  if  my  acts  were  re- 
viewed by  some  competent  tribunal,  but  I  want  a  tribunal  which  is 
engaged  exclusively  in  that  business,  which  will  look  at  these  ques- 
tions as  I  do,  which  will  appreciate  them,  or  at  least  consider  them, 
from  the  same  standpoint.  I  do  not  mean  that  I  would  expect  they 
would  have  the  same  opinion  that  I  had  about  them,  because  I  sup- 
pose thej  would  not,  but  if  they  do  not  I  am  entirely  satisfied.  Give 
me  a  competent  tribunal.  You  may  take  any  three  judges  in  this 
land,  I  do  not  care  who  they  are,  and  let  them  hear  these  questions 
from  one  year's  end  to  the  other,  let  them  become  familiar  with  every 
condition  which  surrounds  the  railway  transportation  of  this  country, 
and  I  will,  as  an  Interstate  Commerce  Commissioner,  prefer  to  be 
reviewed  by  a  body  of  that  sort  than  to  have  the  absolute  power  to 
make  the  rates  without  review,  because  I  am  conscious  of  the  fact 
that  I  might  make  mistakes,  and  I  think  I  might  sometimes  decide  in 
favor  of  the  public  in  that  case  where  I  would  not  in  the  other. 

The  Chairman.  If  you  are  satisfied  that  the  difficulty  can  not  be' 
settled,  that  the  dispute  between  the  carrier  and  the  shipper  can  not 
be  reconciled,  and  in  your  judgment  there  should  be  a  suit  brought, 
why  not  bring  that  suit  directly  in  the  court  rather  than  let  the  Com- 
mission take  the  time  and  have  a  hearing  and  then  have  that  re- 
viewed ?     Do  you  get  the  idea  ? 

Mr.  Prouty.  I  do,  entirely.  You  look  at  that  from  a  practical 
standpoint,  of  course. 

The  Chairman.  Yes;  to  prevent  delay. 

Mr.  Prouty.  In  some  instances  it  would  prevent  delay  and  in  some 
instances  it  would  not.  Let  me  give  you  a  practical  illustration. 
Now,  you  take  the  only  case  in  which  an  application  has  been  made 
to  us  to  proceed  under  what  is  known  as  the  Elkins  bill.  That  was 
the  Wichita  sugar  differential  case.  In  that  case  the  question  at  issue 
was  the  comparative  rate  on  carloads  of  sugar  from  various  points 
to  Kansas  City  and  to  Wichita.  Sugar  is  refined  in  the  United  States 
very  largely  on  the  Atlantic  seaboard.  'Wlien  it  is  refined  on  the 
Atlantic  seaboard  it  may  get  to  Wichita  in  two  ways.  It  may  go  to 
Kansas  City  and  so  on  through  to  Wichita,  or  it  may  and  frequently 
does  go  down  to  Galveston  and  go  from  Galveston  by  rail  up  to  Kan- 
sas City,  and  in  that  way  it  goes  through  Wichita.  '  In  the  first  case 
the  sugar  travels  225  miles  farther  in  going  to  Wichita  than  going 
to  Kansas  City,  and  in  the  second  case  the  sugar  travels  225  miles 
farther  in  going  to  Kansas  City  than  in  going  to  Wichita. 

Now,  a  great  deal  of  sugar  is  produced  in  Louisiana,  at,  I  may  say, 
New  Orleans,  The  distance  from  that  point  of  production  to  Kansas 
City  and  to  Wichita  is  practically  the  same.  A  great  deal  of  sugar 
is  produced  out  on  the  Pacific  coast.  That  sugar,  in  order  to  get  to 
Kansas  City,  has  to  go  through  Wichita  to  Kansas  City.  Now,  out 
of  that  very  complicated  situation  there  has  grown  up  in  the  last 


REGULATION    OF    EATLWAY   RATES.  17 

dozen  years  a  bitter  fight,  and  that  fight  has  resulted  in  the  applica- 
tion of  all  sorts  of  differentials  between  those  points.  The  differen- 
tial has  sometimes  been  15  cents.  It  has  sometimes  been  nothing. 
It  has  sometimes  been  five  or  seven  or  eight,  or  whatever  happens  to 
be.  On  the  1st  of  January  the  railroads  had  entered  into  an  agree- 
ment. They  had  arrived  at  some  sort  of  an  understanding  by  which 
that  differential  was  fixed  at  15  cents,  and  the  people  of  Wichita 
applied  to  the  Interstate  Commerce  Commission  and  asked  to  insti- 
tute a  suit  under  the  Elkins  bill  for  the  purpose  of  correcting  that 
discrimination. 

I  happened  to  be  in  the  West  at  that  time,  and  w^as  the  member  of  the 
Commission  who  saw  the  attorney  for  the  Wichita  people.  I  said  to 
liim,  "  This  act  provides  that  the  Interstate  Commerce  Commission 
shall  institute  a  suit  if  it  has  reasonable  ground  to  believe  that  the 
present  differential  is  wrong.  I  can  not  say  that  I  have  any  reason- 
able ground  to  believe  that  the  present  differential  is  wrong.  We 
have  decided  that  the  rate  may  properly  be  higher  to  Wichita  than 
to  Kansas  City,  and  how  can  I  say,  without  some  investigation,  that 
your  rate  is  wrong,  and  how  can  I  recommend  the  institution  of  a 
suit  on  that  basis?  Before  I  can  do  that  we  must  have  an  investiga- 
tion." I  said  to  him,  '"  You  file  a  complaint  with  the  Interstate  Com- 
merce Commission,  and  we  will  investigate  your  complaint,  and 
after  we  have  done  that  we  will  determine  whether  we  will  proceed 
imder  the  Elkins  bill  or  whether  we  will  make  an  order  and  proceed 
in  that  way."  I  think  his  complaint  was  filed  somewhere  about  the 
16th  or  17th  of  December.  AVe  had  to  be  in  Chicago  on  the  27th  of 
December,  and  we  heard  the  complaint  then.  We  decided  it  in  ten 
days  after  it  was  heard.  We  decided  that  they  ought  to  apply  a 
differential  of  8  cents. 

The  railroads  complied  with  that  order.  Now,  if  in  that  case  the 
Interstate  Commerce  Commission  had  brought  a  suit,  there  would 
not  have  been  an}^  termination  of  that  suit  until  it  got  through  to  the 
Supreme  Court  of  the  United  States.  The  shippers  at  Kansas  City 
were  on  one  side  and  the  shippers  at  AVichita  were  on  the  other  side, 
and  they  were  bound  to  fight  it  out,  and  in  that  case  where  the  order 
of  the  Commission  was  complied  with  the  petitioners  got  relief 
within  a  month,  whereas  in  the  other  case  they  would  not  have  gotten 
it  witliin  two  years.  Now,  suppose  the  order  had  not  been  complied 
with.  Suppose  we  had  brought  a  suit  to  enforce  the  order.  There 
is  no  reason  why  we  might  not  have  secured  a  judgment  in  the  case 
of  that  suit  exact!}'  as  quick  as  we  could  secure  a  final  decree  in  the 
ca;-e  of  a  proceeding  under  the  Elkins  bill. 

Senator  Dolliver.  Was  that  an  order  within  the  present  power  of 
the  Commission? 

Mr.  Prouty.  No;  the  order  of  the  Commission  was  this.  The 
Commission  ordered  that  they  cease  and  desist  from  charging  the 
present  differential  of  15  cents  and  it  recommended  that  a  differential 
of  8  cents  be  substituted,  and  the  railwaj^s  accepted  the  recommenda- 
tion and  substituted  that  differential. 

Senator  Dolliver.  Do  you  recognize  the  present  differentials  exist- 
ing by  consent  of  the  public  in  the  railroads  as  a  beneficial  and  wise 
thing  and  something  in  the  interest  of  transportation,  or  would  j'ou 
abolish  them. 

74lA— 05 2 


18  KEGULATIOX    OF    RAILWAY   RATES. 

Mr.  Prouty.  I  do  not  think  you  could  abolish  them. 
Senator  Dolliver.  Do  j^ou  think  that  they  are  beneficial  and  in  the 
interests  of  the  public? 

Mr.  Prouty.  I  think  they  are  absolutely  essential,,  yes.  I  was 
going  to  say  that  a  differential  sometimes  means  one  thing  and  some- 
times another.  Generally  speaking  1  ihink  tliere  must  be  a  difference 
in  rate  between  communities,  and  that  that  is  in  the  interest  of  com- 
petition.    You  could  not  have  competition  Avithout  it. 

Senator  Dolliaer.  One  other  question  and  I  am  through.  In 
adjusting  the  difference  between  localities  situate  on  different  rail- 
roads, don't  you  think  that  on  the  whole  the  railroads  themselves  on 
the  ground  having  charge  of  the  matter  could  adjust  those  differ- 
ences ? 

Mr.  PROiTTy.  Yes. 

The  Chaikimak.  Better  than  the  Commission? 

Mr.  Prouty.  Yes,  I  do;  but  I  think  there  are  cases  in  which 
numbers  of  the  public  who  are  injured  should  have  some  remedy,  and 
in  a  case  of  that  sort  I  believe  the  only  possible  remedy  is  to  be  applied 
through  a  commission. 

The  Chairman.  Through  a  commission  rather  than  through  the 
courts  ? 

Mr.  Prouty.  I  do  not  think  the  court  has  the  power  to  apply  it. 
The  Chairman.  As  to  localities? 

Mr.  Prouty.  Certainly,  as  to  localities.  Now,  as  to  whether  in 
my  opinion  the  railroad  traffic  men  are  not  ordinarily  better  qualified 
than  a  member  of  the  Interstate  Commerce  Commission  to  determine 
what  these  differentials  should  be  between  different  i^oints,  especially 
different  points  on  the  line  of  that  particular  traffic  man,  I  think 
that  he  in  all  cases  ought  to  have  that  right,  but  that  the  right  should 
be  subject  to  supervision  somewhere.  I  desire  to  give  an  illustration 
of  that.  I  can  best  take  all  these  illustrations  right  out  of  the  files 
of  the  Commission,  and  1  will  take  this  illustration  from  the  last  case 
that  we  had  in  Chicago.  A  good  deal  of  corn  is  raised  in  Texas,  but 
not  all  that  they  consume  there.  A  certain  amount  is  bought  in 
Kansas  and  sent  down  there.  It  is  sometimes  sent  as  corn  meal  and 
sometimes  as  corn  and  ground  in  Texas.  The  Texas  mills  have 
insisted  that  the  railroads  should  make  a  lower  rate  on  corn  than 
they  made  on  corn  meal,  and  the  Texas  commissioners  insisted  that 
they  should  malce  a  lower  rate  on  corn  than  on  corn  meal  for  the 
purpose  of  allowing  the  Texas  mills  to  grind  corn. 

This  differential  for  the  last  ten  years  has  been  3  cents  a  hundred 
pounds.  On  the  19th  day  of  last  February  it  was  advanced  from  3 
cents  a  hundred  pounds  to  from  T|  to  9  cents  a  hundred  pounds  by  rais- 
ing the  rate  on  corn  meal.  One  cent  a  hundred  pounds  is  a  pretty 
good  profit  in  grinding  that  corn  meal,  and  of  course  this  change 
in  that  differential  simply  puts  the  Kansas  miller  out  of  business, 
shut  up  the  mills,  and  they  applied  to  the  Interstate  Commerce  Com- 
mission to  investigate  that.  On  our  hearing  in  Chicago  these  facts 
were  developed :  The  Texas  commission  was  proposing  to  reduce  the 
rates  on  grain  and  the  products  of  grain  in  the  State  of  Texas,  and 
they  had  issued  notice  that  on  a  certain  day  they  would  have  a  hear- 
ing at  the  capitol  for  the  purpose  of  determining  whether  these  rates 
should  be  reduced.     The  millers  of  the  State  of  Texas  were  asking 


EEGULATIOX    OF    RAILWAY   RATES.  19 

for  this  reduction  in  Texas  rates.  The  railroads  went  to  the  millers  of 
Texas  and  they  said  to  them,  "Is  there  anything  you  warit  here?" 
"  AAHiy,"  said  the  millers, "  3'es ;  Ave  would  like  to  have  that  dili'erential 
between  corn  and  corn  meal  increased ;  we  think  you  ought  to  put  the 
rate  on  corn  meal  up."  The  railroad  said,  "All  right;  you  just  stay 
away  from  that  meeting  down  at  Austin  so  that  there  will  not  be 
any  excuse  for  the  Texas  commission,  if  it  undertakes  to  reduce  these 
rates,  and  we  will  raise  this  differential;  we  will  raise  the  rate  on 
corn  meal  to  the  rate  on  flour."'  The  millers  kept  away  from  Austin — 
they  kept  their  part  of  the  bargain — and  they  stayed  away,  and  the 
Texas  commission  was  left  without  an^'  support  for  their  j^roposi- 
tion  to  reduce  the  rates,  and  the  railroads  kept  their  part  of  the  bar- 
gain and  lifted  up  the  rate  on  corn  meal  so  that  the  differential  was 
from  9  to  7^  cents,  and  that  put  the  Kansas  mills  out  of  business. 
Now,  I  think  in  a  case  of  that  sort  those  Kansas  millers  ought  to 
have  somebody  to  whom  tlie}^  can  go  who  has  power  to  right  that 
wrong.  I  do  not  believe  those  Texas  lines  have  any  business  to  do 
that  thing. 

Senator  Kean.  That  was  all  in  Texas? 

Mr.  Prouty.  Oh,  no,  sir;  the  lines  that  did  it  were  the  lines  that 
led  from  Kansas  City  to  Texas — into  Texas.  Those  were  the  lines 
that  made  the  raise,  but  thev  did  it  at  the  request  of  their  Texas 
connections.  You  talk  about  the  confiscation  of  property.  Could 
you  have  any  more  absolute  confiscation  of  proj)erty  than  the  con- 
fiscation of  the  property  of  those  mills?  You  talk  about  autocratic 
action.  Could  you  have  any  action  that  is  any  more  autocratic  than 
that?  Is  it  not  the  duty  of  the  United  States  Government  to  pro- 
vide a  tribunal  somewhere  which  justly  and  fairly  can  judge  be- 
tween these  Kansas  millers  on  the  one  side  and  these  railroad  lines 
on  the  other  side?  And  I  want  to  say,  Mr.  Chairman,  as  em- 
phatically as  I  can,  that  I  utterly  dissent  from  this  proposition 
which  has  been  sent  broadcast  over  the  country,  that  to  give  some 
tribunal  that  right  is  tantamount  to  investing  that  tribunal  with 
the  pjower  to  fix  the  interstate  rates  of  this  country.  I  want  to  insist 
that  there  is  not  the  slightest  analogy  between  the  two  propositions, 
and  I  want  to  make  that  as  plain  and  emphatic  as  I  can,  because  it 
to  bestow  upon  the  Interstate  Commerce  Commission  that  right  is 
to  clothe  it  with  the  right  to  make  the  interstate  rates  of  this  countrj^ 
I  am  not  for  it;  but  it  has  not  that  right,  it  has  not  that  power,  and 
it  is  not  analogous  to  that  power. 

Senator  Dolliver.  AATiat  is  the  objection  to  that  general  power? 

Mr.  Prouty.  Of  fixing  all  the  rates  ? 

Senator  Dolliver.  Yes. 

Mr.  Prouty.  Well,  now,  I  do  not  admit  that  the  Interstate  Com- 
merce Commission 

Senator  Dolliver.  Mr.  Stickney,  of  the  Great  Western  Railway, 
has  filed  a  paper  in  wdiich  he  says  that  this  piecemeal  business  is 
worthless  to  the  public,  and  that  nothing  could  be  of  anj'-  value  to  the 
public  in  that  particular  unless  the  power  to  adjust  these  schedules 
was  placed  bodily  in  this  Commission. 

Mr.  Prouty.  I  do  not  admit  that  a  proper  commission — and  I  do 
not  think  the  present  Commission  is  a  proper  commission — I  do  not 
admit  that  a  proper  commission,  with  the  proper  staff,  could  not 


20  EEGULATIOISr    OF    RAILWAY   RATES. 

make  the  interstate  rates  of  this  country.  I  think  they  could,  without 
any  difficulty,  but  I  have  always  believed,  in  the  first  place,  that,  as  a 
matter  of  justice,  the  railroads  should  be  allowed  to  fix  their  own 
rates.  Our  railroads  are  private  property.  The  moiiey  has  gone 
into  those  enterprises  upon  the  implied  understanding,  at  least,  that 
they  should  have  the  right  to  manage  them  as  they  wanted.  I  believe 
they  should  be  allowed  to  do  that,  subject  only  to  this  qualification, 
the  same  qualification  which  rests  upon  the  use  of  every  other  kind 
of  property  in  the  world,  that  they  shall  manage  that  property  within 
the  law. 

I  think  as  a  matter  of  justice  it  is  the  right  of  the  railroad  com- 
pany' to  fix  its  own  rate  until  by  the  fixing  of  that  rate  it  injures  the 
public,  and  then  I  think  the  public  must  interfere  and  stop  it.  That 
is  the  first  reason.  The  second  reason  is  that  in  my  opinion  it  is 
for  the  interests  of  the  public  that  they  should  fix  their  own  rates. 
I  think  it  is  for  the  interest  of  the  public  that  a  raih'oad  should  have 
the  right  to  develop  an  industry  on  its  own  lines.  Let  me  give  you 
an  illustration  of  what  I  mean  there,  and  I  will  take  that  from  the 
last  case  Ave  had  in  Chicago — another  case,  the  case  of  the  Meneshaw 
Wooden  Ware  Company,  Lard  tubs  are  used  in  great  quantities 
on  the  Missouri  River,  and  until  of  late  they  have  been  manufac- 
tured in  Minnesota.  A  factory  has  been  established  at  Tacoma  to 
make  them.  Lumber  costs  less  in  Tacoma  than  it  does  in  Minnesota, 
although  labor  costs  a  little  bit  more.  Still  the  lard  tubs  can  be 
produced  much  more  cheaph^  in  Tacoma  than  they  can  in  Minne- 
sota. The  Tacoma  people  went  to  the  Northern  Pacific  and  said, 
"  Make  us  a  rate  by  which  w^e  can  put  those  tubs  into  the  Missouri 
River  country."  A  rate  of  85  cents  w^as  made,  but  that  was  not 
satisfactory,  and  finally  a  rate  of  65  cents  was  made,  and  on  that 
rate  the  Tacoma  factory  sells  about  half  the  lard  tubs  used  in  the 
Missouri  River  district. 

It  seems  to  me  that  ]Mr.  Hanniford,  of  the  Xorthern  Pacific,  should 
have  the  right  to  make  a  rate  of  that  sort  to  develop  an  industry  on 
his  line,  provided  he  does  no  injustice  to  anybody  else,  and  I  believe 
it  is  for  the  interest  of  the  public  that  he  should  have  the  right  to 
make  that  rate.  The  case  came  up  in  this  Avay :  AVhile  Mr.  Hanni- 
ford's  rates  on  those  commodities  from  Tacoma  to  the  Missouri  River 
is  65  cents,  his  rate  the  other  w^ay  is  $1.85,  and  a  complainant  said 
that  jVIr.  Hanniford  ought  to  have  made  him  just  as  low  a  rate  from 
the  Missouri  River  to  Tacoma  as  he  made  from  Tacoma  to  the  Mis- 
souri River.  That  is  the  way  the  complaint  came  up ;  but  my  point 
IS  illustrated  by  the  rate  which  Mr.  Hanniford  made  to  develop  his 
industry.  I  think  he  should  be  alloAved  to  do  that,  and  that  it  is 
for  the  interest  of  the  public  that  he  should.  In  my  judgment  the 
railroad  rates  of  this  country  to-daj^  are  lower  than  they  would  have 
been  had  they  been  made  by  any  interstate  commerce  commission  in 
the  world.  But  I  call  attention  especialh'  to  the  fact  that  the  influ- 
ences Avhich  have  forced  down  the  railwa}^  rates  of  the  United  States 
no  longer  operate  to  a  very  great  extent. 

AVhen  I  came  on  to  the  Interstate  Commerce  Commission  eight 
years  ago  there  was  a  most  vigorous  competition  between  the  railroads 
in  railway  rates  in  all  parts  of  this  country.     To-day  that  competi- 


EEGULATIOX    OF    RAILWAY    KATES.  21 

tion  has  disappeared.  You  have  left  the  kind  of  competition  that  I 
refer  to  in  some  cases,  but  that  competition  only  exists  in  peculiar 
cases  and  particular  cases,  and  it  is  disappearing.  You  have  heard, 
I  expect,  a  good  deal — I  have  not  read  these  hearings  so  I  do  not 
know — about  the  force  of  market  competition.  That  is  the  kind  of 
competition  I  call  attention  to.  It  is  a  more  subtle  kind  of  com- 
petition than  railroad  competition  is,  because  it  can  take  place 
between  the  railroads  which  reach  the  same  point  from  opposite 
directions,  and  that  is  not  true  where  vou  have  the  simple  railwav 
competition  between  competing  carriers,  so  to  speak.  But  let  me 
assume  a  case.  St.  Louis  sells  goods  in  Denver  and  Chicago  sells 
goods  in  Denver.  The  St.  Louis  merchant  says  to  the  Missouri 
Pacific,  "  Make  me  a  rate  and  I  will  give  you  some  traffic."  The 
Chicago  merchant  says  to  the  Northwestern,  "  Make  me  a  rate  and  I 
will  give  you  some  traffic."  These  two  lines  make  the  rate  to  Denver 
against  one  another,  bidding  against  one  another  for  the  purpose  of 
obtaining  the  traffic.  It  does  not,  as  a  general  rule,  increase  the 
amount  of  traffic,  it  does  not  increase  the  amount  of  groceries  con- 
sumed in  Denver;  it  simph^  determines  whether  they  shall  start 
from  St.  Louis  or  Chicago,  whether  they  shall  go  by  the  Missouri 
Pacific  or  the  Northwestern.  Now,  then,  if  the  Missouri  Pacific  and 
the  Northwestern  are  owned  by  the  same  persons,  what  becomes  of 
your  market  competition  They  raise  that  rate  2  cents  a  hundred 
pounds;  the  distribution  of  the  traffic  is  exactly  the  same  and  your 
market  competition  is  gone. 

Senator  Dolliver.  Do  you  mean  to  say  that  that  kind  of  competi- 
tion between  the  Missouri  Pacific  and  the  Northwestern  in  a  case  like 
that  has  disappeared  ? 

Mr.  Prouty.  Certainly  I  do,  to  a  very  great  extent.  I  do  not  mean 
to  say  entirely.  I  do  not  mean  to  say  it  has  disappeared  to  the  same 
extent  that  competition  in  the  rate  has,  because  that,  for  all  practical 
purposes,  has  absolutely  disappeared  in  the  United  States.  I  do  not 
pretend  to  say  that  competition  in  facilities,  market  competition, 
has  disappeared,  but  I  say  it  is  disappearing.  Let  me  give  you  an 
illustration  of  that.  I  will  take  this  from  our  own  files.  About  the 
1st  of  January,  1903,  the  rates  from  St.  Louis  and  that  territory  into 
Texas  were  advanced.  They  were  advanced  to  a  higher  j^oint  than 
they  had  ever  touched  before  since  the  Interstate  Commerce  Commis- 
sion existed,  and  we  felt  that  it  was  our  duty  to  investigate  the  ques- 
tion of  those  rates.  This  situation  was  developed :  Articles  consumed 
in  Texas  are  purchased  both  in  St.  Louis  and  Chicago  and  also  in  New 
York. 

Now,  the  rate  from  New  York  to  Galveston  and  from  Galveston 
to  the  interior  towns  of  Texas,  common  points,  as  compared  with  the 
rate  from  St.  Louis  to  Texas  common  points,  determines  whether  the 
goods  shall  be  bought  in  New  York  or  in  St.  Louis,  so  that  you  have 
there  market  competition.  It  turned  out  that  before  this  advance  in 
rates  from  St.  Louis  into  Texas  an  agreement  had  been  made  between 
the  steamship  lines  which  serve  Texas  and  the  railroads  which  carry 
that  traffic  into  the  interior  by  which  the  rates  from  New  York  were 
to  be  advanced  to  the  same  extent  that  the  rates  from  St.  Louis  were 
to  be  advanced,  and  the  traffic  men  testified  that  they  could  not  and 
they  would  not  have  made  the  advance  from  St.  Louis  had  not  the 


22  EEGULATIOlSr    OF    RAILWAY   RATES. 

Xew  York  lines  agreed  to  make  the  advance  from  New  York.  Just 
look  on  that  map  there  and  you  will  see  across  the  southern  part,  from 
Georgia  to  the  middle  of  Texas,  a  zone  where  yellgw-pine  lumber 
grows.  There  are  mills  all  the  way  from  Georgia  to  the  middle  of 
Texas,  nearly  1,500  miles.  Above  the  Ohio  Elver  and  east  of  the 
Mississippi  !River  and  Avest  of  a  line  drawn  from  Pittsburg  to  Buffalo 
is  what  is  called  the  Central  Freight  Association  territory.  Very 
large  quantities  of  yellow-pine  lumber  are  produced  in  that  whole 
section  which  find  their  way  into  the  Central  Freight  Association 
territory,  and  the  mills  all  the  way  from  Georgia  to  Texas  desire  to 
sell  in  that  territory. 

Now,  there  you  lia^e  market  competition,  and  market  competition 
of  the  most  virulent  kind,  and  that  sort  of  market  competition  ham- 
mered doAvn  that  rate  until  it  was  a  low  rate  without  the  slightest 
doubt.  That  competition  has  disappeared.  Those  rates  were  ad- 
vanced, first  1  cent,  and  then  another  cent,  and  finally  they  were 
advanced  2  cents  a  hundred  pounds,  and  the  testimony  on  that  trial 
was  to  the  effect  that  unless  every  line  which  led  from  every  part  of 
that  territory  had  first  agreed  to  make  that  advance  it  never  could 
have  been  made.  That  is  the  testimony.  That  is  what  I  mean  by 
the  disappearence  of  market  competition.  I  don't  know  whether 
5-0U  gentlemen  appreciate  the  extent  to  which  railroad  operation  has 
been  unified  in  the  United  States.  I  had  occasion  the  other  day  to 
tell  one  of  our  clerks  in  our  office  to  make  me  up  a  statement  which 
would  show  certain  facts  with  reference  to  certain  great  systems  of 
railroads  in  the  United  States.  I  gave  to  him  six  systems,  and  if  I 
remember  right  those  six  systems  were  the  Vanderbilt  system,  the 
Pennsylvania  system,  the  Gould  system,  the  Harriman,  the  Hill  sys- 
tem, and  the  Ivock  Island  system.  I  said  to  him,  "  You  take  the 
statistical  returns  of  the  railways  to  the  Interstate  Commerce  Com- 
mission and  tell  me  from  those  statistical  returns  how  many  miles 
of  railroad  are  controlled  by  those  six  systems."  He  did  so,  and  it 
turned  out  that  of  all  the  railroads  of  the  United  States  about  55 
per  cent  were  embraced  in  those  systems. 

But,  gentlemen,  that  did  not  express  it,  for  the  simple  reason  that 
the  railroads  which  were  embraced  within  those  systems  do  so  much 
more  business  and  were  so  much  more  important  than  the  railroads 
left  out  of  the  systems.  For  instance,  there  are  17,000  miles  of  double 
track  in  the  United  States.  Of  that  17,000  miles  10,000  miles  belong 
to  the  Pennsylvania  and  the  New  York  Central  systems  alone.  Of 
the  railway  capitalization  of  the  United  States  two-thirds  is  em- 
braced in  those  systems.  Of  the  railway  gross  receipts  in  the  United 
States  62  per  cent  are  embraced  in  those  systems.  That  does  not 
express  it.  The  men  who  arc  potential  in  these  systems  are  poten- 
tial in  other  railroads  in  the  United  States.  I  say  that  competition 
between  the  railroads  has  ceased,  and  if  it  has  not  ceased  entirelj^  it 
will  in  the  near  future.  The  end  of  this  thing  is  not  yet.  You  come 
up  into  my  country,  and  take  the  Boston  and  Maine  Railway  Com- 
pany, and  there  you  have  a  j)roperty  Avhich  operates  2,300  miles  of 
railway.  Its  capital  stock  is  $27,000,000.  so  that  an  investment  of 
$14,000,000  controls  every  railroad  there  is  in  New  England  north 
of  Boston  and  Albany  and  east  of  the  Green  Mountains.  You  can 
go  then  into  Mr.  Hine's  territor}'.  I  do  not  remember  just  how  much 
the  Louisville   and   Nashville   operates,   but   probably   3,500  miles. 


EEGULATION    OF    EAILWAY   RATES.  23 

The  Atlantic  Coast  Line  operates  4,500  miles,  and  the  Atlantic  Coast 
Line  owns  the  Louisville  and  Nashville.  The  capital  stock  of  the 
Atlantic  Coast  Line,  as  I  remember  it,  is  $38,000,000;  so  that  an 
investment  of  $19,000,000  controls  those  8,000  miles  of  railway. 
AVhy,  gentlemen,  there  is  no  limit  to  it.  You  can  not  rely  on  competi- 
tion to  reduce  these  rates.  That  is  the  point  I  wish  to  make.  I  say 
that  you  must  rely  on  something  else,  because  competition  has  gone. 
1  do  not  say  that  it  ought  not  to  go.  I  do  not  sa}^  that  anybody  is 
complaining  because  it  has  gone,  but  I  say  it  has  gone,  as  a  fact. 

Senator  Doluver.  Those  cases  you  cited  where  the  differentials 
were  changed,  were  they  such  cases  that  you  think  could  not  be 
brought  directly  into  the  courts  under  the  Constitution,  according  to 
your  argument — in  the  first  instance,  I  mean? 

Mr.  Prouty.  I  do  not  think  the  court  has  any  power  to  determine 
a  rate  for  the  future,  and  I  do  not  think  that  the  Commission  has 
to-day  on  its  docket  a  case  which  can  be  satisfactorily  disposed  of 
without  determining  the  rate  for  the  future. 

Senator  DoiiLivER.  These  are  the  cases  you  cited. 

Mr.  Prouty.  Yes. 

Senator  Dolliver.  You  say  the  power  to  fix  the  rates  primarily 
belongs  to  the  road,  but  there  should  be  this  power  invested  in  some 
tribunal  to  correct  an  abuse.  The  power  of  those  to  fix  a  rate,  accord- 
ing to  the  testimonv  given  here,  would  lead  to  the  reduction  of,  say, 
1,000  rates. 

Mr.  Prouty.  That  is  often  so. 

Senator  Doij;.iver.  Following  that  up,  joix  would  reach  nearly  all 
the  rates  in  the  country. 

Mr.  Prouty.  I  do  not  think  you  would;  but  I  would  like  to  say  a 
word  on  that,  because  I  have  some  ideas  about  that.  Suppose  that 
the  Esch-Townsend  bill  became  a  law.  That  is  a  rather  violent  sup- 
position, but  we  may  suppose  it  for  the  sake  of  argument.  "We  will 
say  that  to-morrow  morning  it  becomes  a  law.  Every  traffic  manager 
in  the  United  States  has  exactly  the  same  right  to  change  his  rates 
to-morrow  morning  that  he  has  now.  There  is  no  question  about  that. 
If  that  bill  became  a  law,  what  would  happen?  I  do  not  know  of 
any  better  answer  to  that  question  than  to  inquire  what  did  happen. 
The  Interstate  Commerce  Commission  never  possessed  the  power  to 
make  a  rate  or  to  fix  a  differential,  but  the  Interstate  Commerce  Com- 
mission supposed  that  it  had  that  power.  It  exercised  that  power. 
The  people  supposed  it  had  that  power.  The  railroads,  with  some 
few  exceptions,  supposed  it  had  that  power  and  conceded  it.  Now, 
what  did  happen  when  just  exactly  that  thing  was  done?  The  act 
to  regulate  commerce  went  into  effect  in  April,  1887.  On  November 
1,  1887,  the  Commission  decided  the  case  of  the  Board  of  Farming- 
ton,  if  I  get  the  name  right,  against  the  Milwaukee  and  St,  Paul  road. 

The  Milwaukee  and  St.  Paul  has  two  lines  between  St.  Paul  and 
Chicago,  one  of  which  is  called  the  "  River  Line,"  running  through 
Red  Wing,  and  the  other — I  forget  the  name— runs  through  Farm- 
ington  and  is  a  longer  line.  The  rate  on  grain — corn,  wheat,  and  grain 
products — on  the  river  line  was  7^  cents  to  Chicago,  and  the  rate  on 
the  other  line  from  Farmington  was  15-J-  cents  to  Chicago.'  Farming- 
ton  complained  that  there  was  an  undue  discrimination  against  that 
town.  The  Commission  heard  the  case  and  decided  that  there  was — 
decided  that  the  rate  from  Farmington  must  not  exceed  the  rate  from 


24  REGULATION    OF    RAILWAY    RATES. 

Red  Wing  and  other  points  on  the  river  division  hj  more  than  one- 
third,  and  that  order  was  complied  with.  Immediate!}^  afterwards 
there  came  this  Evans  case,  of  which  I  have  spoken,  in  which  the 
court  reduced  the  rate  on  wheat  from  "Walla  Walla  to  Portland  from 
30  to  234  cents.  Immediately  afterwards  came  the  Reynolds  Case,  in 
which  the  Commission  determined  the  classification  on  lumber  should 
be  the  same  as  the  classification  on  ties,  and  it  ordered  the  railways 
to  make  the  classificaton  on  ties  the  same  as  the  classification  on 
lumber. 

The  thing  I  desire  to  call  attention  to  is  the  fact  that  the  Interstate 
Commerce  Commission  did  exercise  then  exactly  the  power  which  it 
saj's  must  be  exercised  b}"  some  commission  now,  and  the  important 
bearing  of  that  is  to  determine  what  would  be  the  result  to-day. 
What  was  the  result  then?  The  result  then  was  that  a  good  many 
complaints  of  discrimination  were  filed;  that  very  few  complaints 
for  unreasonable  rates  were  filed;  but  there  was  no  overturning  of 
commercial  conditions,  there  was  no  attack  on  railway  securities,  the 
streets  were  not  filled  with  widows  and  orphans  rendered  destitute 
by  that  legislation.  It  produced  very  little  effect  on  the  railroad 
operations  of  this  country.  There  is  no  reason  to  suppose  that  the 
effect  to-day  would  be  any  different.  There  are  more  unreasonable 
rates  to-day. 

Senator  Dolliver.  That  vou  have  reasoned  from  the  fact  that  after 
the  interstate-commerce  law  was  passed  it  became  evident  that  the 
general  railway  situation  was  pretty  nearly  perfect;  that  there  was 
little  or  no  dissatisfaction  in  it  and  few  or  no  complaints  made  against 
it.     Would  that  same  state  of  things  prcA^ail  to-day? 

Mr.  Prouty.  No;  I  think  there  was  the  greatest  dissatisfaction 
before  that  act  was  passed. 

Senatoi'  Dollivek.  There  was  a  good  deal  of  talk? 

Mr.  Proi'ty.  But  the  testimonv,  if  vou  will  look  into  it,  showed  the 
rankest  condition. 

Senator  Dolliver.  How  did  it  happen  so  few  complaints  were 
made  ? 

Mr.  Prouty.  A  law  does  two  things:  It  punishes  a  thing  which  is 
wrong — corrects  that — and  it  prevents  the  perpetration  of  a  thing 
which  is  wrong. 

Senator  Dolliver.  Did  it  in  this  case  actually  operate  to  induce  the 
railroads  to  themselves  immediately  set  about  the  correction  of  these 
evils? 

Mr,  Prouty.  Certainly;  the  railroads  of  this  countiy  absolutely  re- 
vised their  tariffs  in  all  official  classification  territory  from  the  time 
the  long  and  short  haul  clause  was  observed,  and  all  over  the  country 
these  tariffs  were  revised  to  conform  with  what  was  understood  to  be 
the  requirement  of  the  law — certainly.  And  that,  I  should  expect, 
would  be  the  efl'ect  of  the  passage  of  a  substantial  law  now. 

The  Chairman.  You  say  that  competition  is  destroj'-ed,  or  in  many 
instances  it  is  destroyed,  and  therefore  I  infer  the  possibility  you 
stated  that  the  rates  can  be  advanced  and  have  been  advanced  by 
reason  of  this  diminution  of  competition? 

Mr.  Prouty.    Yes. 

The  CHAiR3kiAN.  But  is  it  not  a  fact  that  it  is  to  the  interests  of  the 
railroads  themselves  to  help  build  up  and  foster  the  localities  on  their 


REGULATION    OF    RAILWAY   RATES.  25 

lines,  and  is  it  probable  or  possible  that  they  would  oppress  localities 
situate  on  their  lines  and  advance  rates  to  the  injury  of  the  com- 
munities ? 

Mr.  Prouty.  There  is  no  prospect  that  an  enlightened  railroad 
manager  would  do  anything  which  would  lessen  the  revenues  of  his 
railroad. 

The  Chairman.  Does  not  the  railroad  live  and  prosper  and  have 
success  just  as  the  communities  it  reaches  do? 

Mr.  Prouty.   It  certainly  does. 

The  Chairman.  And  can  a  railroad  afford,  under  those  conditions, 
to  unreasonablv  advance  the  tariff  rates? 

Mr.  Prouty.  A  railroad  can  not  afford  to  advance  the  tariff  rates  to 
such  an  extent  as  will  deplete  its  revenues. 

The  Chairman.   Or  reduce  business. 

Mr.  Prouty.  It  may  reduce  its  business  and  not  dej)lete  its  reve- 
nues. Take  an  illustration.  I  put  it  to  Mr.  Baer  when  he  was 
talking  about  coal.  There  are  4,000,000  tons  of  anthracite  coal  used 
in  the  cit}?^  of  Xew  York.  If  the  price  of  that  coal  is  advanced  a 
dollar  a  ton,  it  will  perhaps  decrease  its  use  by  a  half  million  tons,  so 
that  you  will  sell  three  million  and  a  half  tons  there.  If  you  increase 
that  price  a  dollar,  you  gain  three  million  and  a  half  dollars,  and  you 
lose  the  sale  of  half  a  million  tons. 
■    Senator  Dolliver.  That  is  where  the  road  owns  the  product? 

Mr.  Proi'ty.  Yes. 

Senator  Dollivp:r.  There  is  no  competition ;  and  there  is  another 
thing  that  the  road  was  doing — a  vicious  thing. 

Mr.  Prouty.  I  do  not  say  that  it  is  a  vicious  thing  or  an  improper 
thing  at  all.  I  do  not  intimate  that.  I  do  not  say  that  the  rate  is 
too  hisfh. 

Senator  Dolliver.  It  is  an  abuse. 

Mr.  Prouty.  I  do  not  claim  it  is  an  abuse.  I  am  not  intending  to 
make  any  insinuation  that- the  rate  is  too  high. 

Senator  Dolliver.  But  do  you  think  it  is  projDer  for  railroads  to  be 
interested  in  manufacturing  or  mining  as  against  their  competitors 
on  their  lines  ? 

Mr.  Prouty.  That  is  an  economic  ^proposition.  No ;  I  do  not  much 
think  that  it  is;  but  they  are  in  a  great  many  cases,  not  only  in  the 
case  of  the  anthracite-coal  roads  in  Pennsylvania,  but  it  is  the  case 
with  the  bituminous  roads  out  West  and  in  a  great  many  places. 
Now,  what  I  wanted  to  say  was  this :  Take  the  cattle  rate  from  Texas. 
That  cattle  rate  has  been  advanced  three  times  within  the  last  six 
years.  I  do  not  suppose  that  the  advance  in  that  cattle  rate  has 
affected  the  movement  of  cattle.  I  expect  there  are  probably  as 
many  cattle  raised  in  Texas  to-day  as  would  be  raised  in  Texas  if  the 
rate  was  exactly  the  same  as  it  was  six  years  ago.  Nevertheless,  the 
revenues  of  the  companies  have  been  very  materially  increased,  so 
that  when  you  can  increase  the  rate  without  diminishing  the  move- 
ment it  is  for  the  interest  of  the  railway  to  increase  the  rate ;  and  it 
may  often  happen  that  a  railroad  can  increase  the  rate  without 
diminishing  the  movement  to  a  point  which  would  be  utterly  ut;rea- 
sonable  and  unjust. 

I  would  like  to  say  one  thing  more.  I  said  competition  had  pretty 
well  gone  out  in  this  country.     We  heard  some  testimony  the  other 


26  EEGULATION    OF    RAILWAY   EATES. 

morning  which  rather  ilhistrates  that.  It  was  the  testimony  in  the 
case  of  the  Pittsburg  Plate  Glass  Company,  which  complained  that 
the  import  rates  from  Antwerp  to  certain  points  in  thi§  country/  were 
lower  than  the  domestic  rates  in  this  country.  It  appeared  that  the 
rate  from  Antwerp  to  Chicago  through  Boston  was  40  cents,  and 
from  Boston  to  Chicago  the  rate  was  53  cents,  as  I  remember  it.  It 
appeared  that  the  rate  which  INIr.  Fish  charges  from  New  Orleans 
to  Chicago  was  To  cents,  but  that  the  through  rate  from  Antwerp 
through  New  Orleans  via  the  Illinois  Central  was  32  cents.  Now, 
when  we  came  to  inquire  into  it,  this  turned  out  to  be  the  fact. 
There  Avas  no  competition  between  New  York  and  Chicago;  they 
had  got  that  out  of  the  way.  There  was  no  competition  between 
Boston  and  Chicago;  they  had  got  that  out  of  the  way.  There 
was  no  competition  between  New  Orleans  and  Chicago  because  that 
was  out  of  the  way ;  but  when  you  started  on  the  other  side  in  Ant- 
werp, where  you  could  come  in  through  the  Gulf  of  St.  Lawrence  or 
through  Boston  or  New  York  or  New  Orleans  or  Galveston,  there 
was  the  most  active  competition,  and  that  competition  produced  a  rate 
of  38  cents  from  Antwerp  to  Minneapolis  as  against  the  rate  of  -10 
cents  from  Chicago  to  Minneapolis. 

That  illustrates  the  effect  of  competition.  They  have  expressed 
the  thought  that  they  were  confident  they  would  be  able  to  get  rid 
of  that  competition.  They  had  not  been  able  to  devise  a  means 
yet,  but  they  thought  that  Avithin  a  short  time  they  avouIcI  be  able  to 
persuade  the  Gulf  lines  that  they  ought  to  get  together  and  fix  the 
rate  up  and  then  they  Avould  be  able  to  charge  the  foreigner  just  as 
much  as  the  x\merican. 

Senator  Dolliver.  What  localities  were  injured?  What  localities 
complained  and  will  complain  to  you  ? 

Mr.  Prouty.  The  people  Avho  complained  Avere  the  Pittsburg  Glass 
Company.  The}^  said:  "  Great  heaA-ens,  we  manufacture  glass  down 
here  in  Pittsburg,  and  it  costs  us  more  to  get  our  product  up  to  Min- 
neapolis than  it  costs  the  Belgian  manufacturer  to  get  his  product  all 
the  Avay  from  Antwerp." 

Senator  Dolliver.  Was  the  complaint  made  to  the  Commission? 

Mr.  Prouty.  Yes. 

Senator  Dollia'er.  What  is  the  disposition  of  that? 

Mr.  Prouty.  We  have  not  decided  that  case  yet. 

Senator  Dollia'er.  Noav,  in  beginning  an  inquiry,  how  Avould  you 
constitute  the  Commission?  Would  you  have  their  term  of  serAdce 
for  a  long  time — longer  than  noAv  ? 

Mr.  Prouty.  If  you  ask  me  Avhat  I  think  about  it  as  an  individual, 
I  Avould  say  "  no."'  If  you  ask  me  what  my  opinion  about  it  is  if  I 
were  to  be  appointed  an  interstate  commerce  commissioner,  I  Avould 
say  "  yes." 

Senator  Dolliver.  Do  you  think  a  body  subject  to  political  in- 
fluences, such  as  is  the  case  of  the  Commission  at  present,  removal 
at  the  pleasure  of  the  President 

Mr.  Prouty.  I  do  ?iot  understand  that  the  commissioners  can  be 
removed  at  the  pleasure  of  the  President.  He  takes  that  vieAv  of  it, 
but  I  do  not. 

Senator  Dolliver.  At  the  end  of  a  given  time  or  at  pleasure  would 
you  be  as  untrammeled  and  free  to  act  as  a  court  Avhich  was  appointed 
'for  life? 


REGULATIOI^    OF    RAILWAY   RATES.  27 

Mr.  Prouty.  No;  I  think  you  obtaii:^  a  somewhat  more  independent 
action  in  case  of  a  court  than  you  do  in  case  of  a  commission,  but, 
after  all,  I  think  it  is  a  pretty  good  plan  to  have  an  administrator 
coming  back  to  the  source  of  power  about  once  in  six  or  seven  years. 
I  do  not  find  any  fault  with  that. 

Senator  Dolliver.  If  the  power  is  given  the  Commission  to  sub- 
stitute a  rate  for  one  challenged,  will  not  that  confer  upon  it  the 
power  to  advance  and  lower  rates  ? 

Mr.  Prouty.  I  do  not  think  the  Commission  would  exercise  the 
power  to  advance  a  rate.  It  would  confer  that  power  and  it  must 
of  necessity  confer  that  power  if  the  Commission  is  to  fix  a  differ- 
ential, because  there  are  certain  cases  where  a  differential  can  not  be 
fixed  unless  you  have  a  right  to  fix  both  the  maximum  and  the  mini- 
mum rates. 

Senator  Dolliver.  Where  discriminations  between  the  communities 
are  alleged,  if  the  power  is  given  to  the  Commission  to  fix  the  rate, 
could  it  not  lower  the  rate  or  raise  the  rate  to  avoid  the  discrimina- 
tion? 

Mr.  Prouty.  I  think  the  Commission  in  that  case  should  be  allowed 
to  determine  the  differential  without  saying  whether  the  rate  should 
be  lower  or  higher.  The  railroads  should  be  allowed  to  observe  it. 
If  they  decline  to  observe  it,  then  the  Commission  should  be  allowed 
to  do  it. 

Senator  Dolliver.  Could  you  control  the  question  of  discrimina- 
tion between  communities  except  on  the  power  to  fix  both  the  maxi- 
mum and  the  minimum  ? 

Mr.  Prouty.  I  have  answered  that  question. 

Senator  Dolliver.  That  is  all  the  questions  I  desire  to  ask. 

ISIr.  Prouty.  I  want  to  add  one  thing.  I  have  said  that  the  power 
to  correct  a  rate  was  not  in  any  way  analogous  to  the  power  to  fix  the 
interstate  rates  of  this  country,  and  it  is  not;  but  there  is  a  certain 
basis  of  fact  to  the  claim  of  the  railroads  in  that  respect.  If  you  fix 
one  rate  to-day  and  another  rate  to-morrow,  you  presently  have  fixed  a 
great  many  rates,  and  if  those  rates  can  not  be  departed  from  without 
the  consent  of  the  Commisison  or  a  court  that  fixes  the  rates,  you  have 
got  in  fact  a  more  or  less  rigid  system  of  rates.  I  have  always  insisted 
in  order  to  obviate  that  difficulty— I  do  not  think  there  is  any  real 
difficulty,  but  in  order  to  obviate  it,  if  there  be  one — -that  the  rate 
fixed  by  the  Commission  should  be  observed  for  a  certain  length  of 
time,  and  should  then  cease  to  be  obligatory  on  the  carrier.  I  have 
said  if  the  railroads  observe  it  for  a  year  or  two  years  that  the  carrier 
should  have  the  same  right  to  change  that  rate  as  any  other  to 
begin  anew. 

Senator  Cullom.  jMr.  Prouty,  I  do  not  think  I  want  to  ask  you 
ver}'  many  questions,  but  as  I  understand  you,  the  chief  thing  that 
you  think  ought  to  be  done  by  this  Congress  if  they  do  anything,  is 
to  not  only  allow  you  to  determine  a  reasonable  rate  on  complaint, 
but  if  you  find  that  it  is  not  reasonable,  to  allow  you  to  make  another. 

Mr.  Prouty.  I  do  not  say  that  any  power  should  be  conferred  on 
me  or  that  it  shall  be  conferred  upon  the  present  Commission,  or  any- 
thing of  the  sort,  but  I  say  in  order  to  regulate  the  railroad  rates  of 
this  country  you  have  got  to  do  it  by  a  commission,  and  that  commis- 
sion must  do  what  you  have  said.  It  must  have  the  right  to  fix  the 
rate. 


28  KEGULATIOX    OF    SAILAVAY   EATES. 

Senator  Cullom.  I  do  not  mean  j^ou  personally  or  this  particular 
Commission,  but  an}'  commission  that  may  be  apj^ointed. 

Mr.  Prouty.  Some  commission. 

Senator  Ciillom.  You  think  it  ought  to  be  a  commission  to  fix  a 
rate  for  the  future. 

Mr.  Prouty.  It  can  not  be  anything  else.  I  do  not  know  whether 
it  has  been  spoken  of  here  or  not,  but  the  experience  of  the  English 
people  on  that  point  is  instructive.  They  have  a  law  like  ours,  ex- 
cept that  Parliament  fixes  the  maximum  rate. 

Senator  Culi.om.  You  do  not  believe  a  maximum  rate  in  this  coun- 
try would  amount  to  anything? 

Mr.  Prouty,  It  depends  on  who  fixes  it.  If  the  legislature  of 
Nebraska  fixes  it,  it  amounts  to  a  good  deal;  if  somebody  else,  it  may 
not. 

Senator  Cullom.  Can  a  commission  or  anybody  else  make  a  rate 
for  the  whole  country  and  put  it  in  force  and  sa}"  no  railroad,  no 
interstate  commerce  carrier,  should  go  above  it  ? 

^Ir.  Prouty.  Congress  could. 

Senator  CuLuoat.  We  could  make  it,  but  could  it  be  operated  suc- 
cessfully in  the  interests  of  the  public  as  well  as  of  the  railroads? 

Mr.  Prouty.  It  would  depend  on  the  schedule.  If  the  schedule 
was  all  right,  the  railroads  might  fall  below  that  if  they  wanted  to. 
That  is  what  a  railroad  does  when  it  develops  an  industry  on  its 
lines;  it  makes  a  lower  rate  and  not  a  higher  one. 

Senator  Culloim.  If  the  maximum  rate  were  to  be  made  for  the 
whole  country,  it  would  have  to  be  made  so  high  that  the  railroads 
would  not  observe  it  or  else  the  people  would  be  charged  more  in 
many  cases  than  they  ought  to  be. 

Mr.  Prouty.  I  would  not  favor  the  attempt  to  make  a  maximum 
rate.     I  have  said  that. 

Senator  Cullom.  Some  of  these  States  make  maximum  rates. 

Mr.  Prouty.  Yes;   and  some  make  absolute  rates. 

Senator  CuLuo^r.  And  it  is  possible  that  in  a  State  a  maximum 
rate  might  be  lifted  up  and  not  be  injurious,  but  when  you  come  to 
a  whole  country  with  all  sorts  of  conditio)is  existing  it  would  seem 
to  me  at  least  that  the  maximum  rate  would  be  of  no  particular 
account;  aud,  as  I  understand,  you  would  not  approve  the  making 
of  such  a  rate  ? 

Mr.  Proitty.  Xo  ;  I  have  never  l:)elieved  in  that. 

Senator  Cuu>03r.  But  you  do  believe — I  -want  to  get  that  under- 
stood thoroughly  wliether  you  do  or  not — tliat  a  commission,  to  have 
its  full  force  and  value  to  the  country,  ought  to  have  the  power  not 
only  to  detei'mine  what  a  reasonable  rate  is  or  what  an  unreasonable 
rate  is,  but  when  the}^  determine  that  a  rate  is  unreasonable,  to  under- 
take or  to  declare  what  a  reasonable  rate  should  be. 

;Mr.  Prouty.  Certainly. 

Senator  Cullom.  And  you  are  willing  to  let  that  rate  be  subject 
to  a  court  of  review,  to  be  investigated  afterwards? 

Mr.  Prouty.  I  think  it  ought  to  be.  m  just  so  far  as  a  court  can 
review  it. 

Senator  Cullom.  You  think  it  ought  to  be  ? 

Mr.  Prouty.  Yes.  sir. 

Senator  Cullo^i.  What  would  you  do  in  the  meantime?  Would 
you  have  the  rate  take  effect  immediateh^  upon  your  making  it  ? 


REGULATION    OF    RAILWAY    RATES.  29 

Mr.  Peouty.  1  do  not  think  that  you  can  say  anything  about  that. 
I  think  the  court  has  an  absolute  right  to  decide  and  suspend  any  rate 
which  any  commission  may  make  and  that  you  can  not  help  it. 

Senator  Culi.om.  That  is  probably  so,  but  the  court  would  have 
to  have  some  little  time  to  do  that  in,  and  what  would  you  do  with 
the  rate  in  the  meantime? 

Mr.  Protjty.  It  seems  to  me  that  a  rate  ought  to  stand  in  abeyance 
long  enough  to  permit  a  railroad  company  to  take  any  steps  it  wanted 
10  take.  It  must  publish  its  schedules  if  it  Avants  to  put  a  rate  in 
effect,  and  it  must  file  a  petition  if  it  wants  to  test  a  rate. 

Senator  Cullom.  You  were  going  to  leave  it  to  the  courts  to  deter- 
mine that  question. 

Mr.  Prouty.  I  think  when  the  question  gets  to  the  courts  the  court 
will  take  its  own  time. 

Senator  Cullom.  I  am  talking  now  about  what  you  would  do  with 
the  rate  before  the  court  gets  hold  of  it. 

Mr.  Prouty.  It  seems  to  me  the  rate  ought  to  go  into  effect  after  so 
many  days.     That  is  the  ordinary  rule. 

Senator  Cuixom.  You  have  talked  a  good  deal  about  these  cases 
that  you  haA^e  had  under  consideration.  It  has  been  stated  here,  I 
believe,  that  some  thirty-odd  cases  have  been  tried  by  you  which  have 
been  taken  to  the  courts,  and  all  but  two  of  them.,  perhaps,  have  been 
overruled.     Is  that  true  ? 

Mr.  Prouty.  I  can  not  give  you  the  exact  figures,  and  I  think  you 
had  better  ask  somebody  else  on  the  Commission  about  that.  I  simply 
say  this,  that  I  do  not  think  the  Commission  has  ever  been  overruled 
by  the  Supreme  Court  of  the  United  States  on  a  question  of  fact. 
We  have  attempted  to  make  something  out  of  this  law. 

Senator  Cullom.  I  wish  you  Avould  explain  a  little  about  these 
cases  that  have  been  taken  to  the  courts  and  overruled. 

Mr.  Prouty.  You  have  a  good  illustration  of  that  in  the  case  re- 
ferred to,  this  Missouri  Pacific  Case,  in  wdiich  the  court  held  that 
the  circuit  court  might  take  jurisdiction  and  grant  an  injunction. 
This  Commission,  a  good  many  years  ago,  in  looking  around  for 
some  wa}^  in  which  this  law  could  be  enforced,  instituted  that  suit.  I 
call  attention  to  the  fact  that  this  suit  was  begun  b}^  the  Commission 
and  not  by  the  recommendation  of  Congress  or  the  advice  of  anybody 
else ;  the  Commission  did  that  because  it  was  trying  to  find  a  way  in 
which  to  enforce  the  law.  We  brought  a  suit  in  the  name  of  the  United 
States  to  enforce  the  act  to  regulate  commerce.  Before  that  was  decided 
the  Elkins  bill  had  become  a  law;  but  if  the  Elkins  bill  had  not 
been  passed,  the  judgment  of  the  court  would  have  been  against  the 
contention  of  the  Commission  in  that  case,  and  that  would  have  added 
one  more  to  the  cases  in  which  the  Commission  was  overruled.  Now, 
what  the  Commission  was  trying  to  do  was  to  find  some  foothold, 
some  place  where  it  could  stand  to  enforce  the  provisions  of  this  law. 

Senator  Newlands.  Was  that  a  suit  to  enjoin  rates? 

Mr.  Prouty.  No  ;  to  prevent  the  charge  of  higher  rates  to  Wichita 
than  to  Omaha. 

Senator  New'lands.  You  say  the  court  would  have  held  that  the 
court  had  no  jurisdiction  in  that  case  if  it  had  not  been  for  the 
Elkins  bill? 

Mr.  Prouty.  The  court  says  that. 


30  EEGULATIOX    OF    EAILWAY   EATES. 

Senator  Cullom.  Are  you  certain  about  that  ? 

Mr.  Prouty.  I  think  so. 

Senator  Cullom.  It  is  true  they  did  hold  that  if  the  Elkins  bill 
had  not  passed  it  would  take  jurisdiction • 

Mr.  Pkouty.  When  you  get  seven  members  of  the  Supreme  Court 
you  get  a  good  many.     It  is  generally  about  four  to  five. 

Mr.  Commissioner  Fifer.  I  think  the  majority  opinion  was  against 
the  injunction,  that  the  injunction  would  not  lie  under  the  old  law; 
but  the  Elkins  bill  in  the  meantime  had  become  a  law  and  the  court 
said  it  could  not  try  the  case  under  the  Elkins  law. 

Mr.  Prouty.  I'hat  may  be ;  that  is  what  I  understood. 

Senator  Dollivek.  What  has  become  of  that  case  ? 

Mr.  Prouty.  Nothing  has  been  done  with  that  case  for  this 
reason.  The  Commission  has  held  in  several  instances  that  competi- 
tive conditions  on  the  Missouri  Eiver  justify  a  lower  rate  than  to 
Wichita,  and  we  do  not  think  we  could  say  that  the  rate  to  Wichita 
ought  to  be  as  low  as  the  rate  to  Omaha. 

Senator  Dolliver.  You  got  the  case  now  on  the  calendar  of  the 
circtiit  court  ? 

Mr.  Prouty.  Yes. 

Senator  Dolliver.  Do  you  mean  to  say  the  Commission  refuses  to 
prosecute  further  ? 

Mr.  Prouty.  I  do  not  know  that  the  Commission  refuses  to  prose- 
cute the  case  further.  In  view  of  what  has  been  said  I  think  we 
ought  to  go  on  further,  and  see  what  the  court  can  do,  but  my  under- 
standing of  that  case  has  been  this,  that  if  it  was  found  as  a  fact  that 
the  rate  to  Wichita  ought  not  to  be  any  higlier  than  the  rate  to 
Omaha  the  court  may  possibly  enjoin  the  higher  rate  to  Wichita ; 
but  if  the  court  was  of  opinion  that  the  rate  might  be  higher  to 
Wichita  but  not  as  much  higher  as  now,  it  would  have  no  power  to 
act  in  the  premises.  The  opinion  of  the  Commission  has  been  that 
the  rate  to  Wichita  must  be  higher  than  to  Omaha,  but  not  perhaps 
as  high  as  tiie  present  differential. 

Senator  Dolliver.  Where  do  j^ou  get  the  idea  that  the  court  would 
not  entertain  the  question  of  what  the  differential  might  be  in  such  a 
case  ? 

Mr.  Prouty.  Because  the  Supreme  Court  of  the  United  States 
has  said  it  can  not. 

Senator  Dolliver.  Have  you  got  the  form  of  the  complaint,  the 
prayer  for  relief  in  that  case.  Senator  Clapp? 

Senator  Clapp.  The  ultimate  prayer  of  relief  is  set  out.  The  whole 
bill.  I  thinl?:,  is  not  set  out. 

Mr.  Commissioner  Fifer.  The  Commission  could  do  nothing  fur- 
ther. The  majority  opinion  said  the}^  had  no  authority  whatever  to 
file  the  bill,  and  it  could  not  be  sustained  under  the  old  law.  The 
Elkins  bill,  however,  had  been  enacted,  but  the  court  said  it  did 
not  apply  to  that  case,  and  what  further  could  we  do? 

Senator  Dolliver.  You  could  appeal  it  to  the  Supreme  Court  of  the 
United  States.  They  sent  it  back  under  the  general  ojDinion.  as  I 
recollect,  that  it  was  a  question  of  equity  fully  within  the  jurisdiction 
of  the  court  under  the  Elkins  law  and  could  be  proceeded  with  in  the 
circuit  court.  I  maj^  be  wrong  about  that,  but  that  is  my  recollection 
of  the  situation  of  the  case.     Xow,  then,  if  the  Commission  would 


REGULATION    OF    RAILWAY   RATES.  31 

go  ahead,  possibly  amending  the  complaint  so  as  to  make  this  case 
tliat  any  discrimination  except  one  they  might  suggest  is  unjust  and 
illegal,  I  do  not  see  why  the  court  would  not  be  thoroughly  within 
its  jurisdiction  to  enter  a  decree  that  such  a  discrimination  should 
cease. 

Mr.  Commissioner  Fifer.  And  proceed  under  the  Elkins  Act? 

Senator  Dolliver.  Yes. 

Mr.  Commissioner  Fifer.  That  would  be  beginning  a  new  suit. 

Senator  Dolliver.  No;  the  suit  is  back  there  on  the  calendar  under 
directions  from  the  Supreme  Court. 

Mr.  Prouty.  I  have  not  understood,  and  I  do  not  think  the 
Commission  has  understood,  that  the  Elkins  bill  added  anything 
practically  to  our  power  to  correct  a  discrimination  in  the  published 
tariff;  perhaps  it  does.  The  view  of  it  you  suggest  had  never  quite 
occurred  to  me.  I  do  not  see  how  3^011  could  gain  anything  under  the 
Elkins  bill.  I  do  not  believe  you  would  gain  anything  by  going 
directl}^  into  the  court.  I  do  not  believe  the  remech^  which  the  court 
can  aj)ply  is  auA^  broader  now  than  before  the  Elkins  bill  was  passed. 

Senator  Clapp.  According  to  your  own  statement  this  suit  to 
restrain  discrimination  could  not  have  been  entertained  at  all  before 
the  Elkins  bill  was  passed. 

Mr.  Peouty.  No. 

Senator  Clapp.  Noav  they  do  entertain  it  ? 

Mr.  Prouty.  They  have  jurisdiction  now,  but  that  does  not  increase 
the  remedy. 

Senator  Clapp.  You  had  not  any  remedy  at  all  before  this  was 
passed  ? 

Mr.  Prouty.  It  does  not  increase  the  remedy  which  the  court  could 
apply. 

Senator  Clapp.  No ;  of  course  not. 

Mr.  Pkouty.  And  under  the  Constitution  of  the  United  States  the 
courts  can  not  be  given  power  to  apply  that  remedy. 

Senator  Cullom.  One  witness  says  here  that  he  wants  a  commis- 
sion because  that  is  a  clear  way  of  correcting  the  wrong;  another 
witness  says  that  the  Commission  dawdles  along  with  these  cases 
and  never  gets  to  a  decision  or  to  a  conclusion  of  them,  and  that  a 
direct  application  to  the  court  would  result  in  a  more  speedy  remedy. 
What  I  want  to  get  at  is  an  explanation  from  you  as  one  of  the  Com- 
missioners as  to  what  has  been  the  cause  of  these  long  delays  upon  the 
part  of  the  Commission  in  disposing  of  cases  coming  before  it. 

Mr.  Prouty.  Those  delays  are  partly  due  to  general  causes;  they 
are  partly  due  to  specific  causes  in  particular  instances.  The  varied 
duties  of  the  Commission  render  it  impossible  to  proceed  with  great 
expedition  in  many  cases.  As  I  have  already  said  to  jou,  we 
have  certain  executive  duties.  We  also  have  to  deal  with  these 
informal  complaints.  I  recently  went  to  Chicago  and  was  gone  ten 
■days  hearing  cases  out  there.  When  I  came  back  I  found  on  my 
table  correspondence  with  reference  to  informal  comj^laints  that  took 
me  three  days  to  answer  and  dispose  of.  We  have  conferences  about 
various  things.  People  come  to  talk  to  us.  We  listened  all  day 
yesterday  to  a  man  from  California  who  was  setting  out  the  condi- 
tions of  the  fruit  industry.  We  are  subject  to  the  requirements  of 
the  public  in  that  respect.     We  can  not  proceed  with  the  same  expedi- 


32  REGULATION    01?'    KAILAVAY    RATES. 

tion  that  a  court  does  which  simply  has  a  docket  to  hear  and  nothing 
to  do  but  to  hear  that  docket.  Now,  there  is  another  reason.  You 
gentlemen  do  not  understand  the  extent  of  these  cases.  We  are  send- 
ing out  to-day  what  is  called  the  differential  case  between  the  ports 
of  Boston,  Philadelphia,  New  York,  and  Baltimore.  That  case  was 
begun  a  year  ago,  a  year  and  a  half  ago  perhaps. 

Now,  we  have  taken  the  testimony  in  that  case  in  all  I  expect  a 
month.  We  have  taken  three  or  four  thousand  pages  of  typewrit- 
ten testimony.  That  takes  time.  We  had  the  greatest  difficulty 
in  getting  the  parties  together  to  agree  on  a  time  when  we  could 
hear  the  case  and  take  the  testimony.  That  was  a  case  where  every- 
body was  especially  anxious  to  expedite  it  and  where  the  Commission 
has  never  declined  to  assign  the  case  when  the  parties  were  ready  to 
hear  it,  and  still  that  case  was  not  submitted  for  decision  until  about  a 
month  ago.  Now,  when  you  sit  down  to  decide  that  case  you  have 
3.000  pages  of  testimony  and  you  have  a  mass  of  exhibits  which  you 
could  not  read  through  in  a  month.  The  case  was  argued  for  sev- 
eral days  and  a  thousand  pages  of  briefs  were  filed.  It  takes  time 
to  examine  and  work  out  that  kind  of  a  case.  In  that  case  also  I 
prepared  the  opinion  myself,  sat  up  nights  and  worked  Sundaj^s  in 
order  to  get  it  out.  I  got  it  done  so  that  I  was  readj^  to  hand  it 
to  the  printer.  It  had  taken  me,  I  believe,  ten  days  to  do  that 
work,  including  nights  and  Sunday,  and  it  has  taken  eighteen  days 
to  print  it,  so  that  the  delay  is  not  altogether  on  the  part  of  the 
Commission. 

Now,  there  are  some  other  cases  which  stand  like  this:  Judge 
Veazie,  as  you  know,  was  my  predecessor  on  the  Commission.  For  the 
last  year  he  was  unable  to  do  any  work  at  all,  and  for  a  year  before 
that  he  did  very  little  work.  These  cases  that  were  assigned  to  him 
in  their  regular  order,  as  a  result  came  to  me,  and  when  I  came  on  the 
Commission  I  found  a  lot  of  old  cases  in  which  I  prepared  the 
opinions.  There  were  some  cases  in  which  I  prepared  an  opinion 
which  appeared  to  be  two  years  old  before  the  opinion  was  promul- 
gated. I  prepared  another  opinion  in  the  Bourbon  Stock  Yards  Case, 
from  Louisville,  and  after  the  opinion  was  prepared  in  that  case  and 
before  it  was  promulgated,  we  were  asked  to  retain  the  case  until  a 
case  involving  the  same  principle  was  decided  by  the  Supreme  Court 
of  the  United  States. 

Mr.  Commissioner  Fifer.  That  is  better  than  the  courts,  because 
they  held  the  Wichita  case  for  five  years. 

Mr.  Prouty.  I  think  the  cases  ought  to  be  heard  more  promptly 
by  a  commission.  They  can  be  heard  more  promptl}^  by  a  commission 
than  by  a  court. 

Senator  Neavlands.  In  that  connection,  it  is  claimed  by  the  repre- 
sentatives of  the  railroads  that  this  delay  is  simply  an  inherent  part 
of  the  system,  and  their  contention  is  that  it  is  utterly  impossible 
for  a  commission  to  revise  the  action  of  hundreds  of  traffic  managers 
in  this  country  and  accomplish  the  work. 

Mr.  Prouty.  If  they  can  accomplish  the  work  at  all,  they  can  do 
it  promptly.  If  they  can  not  do  it  prompth',  they  can  not  accom- 
plish it  at  all. 

Senator  Newlands.  Could  you  suggest  any  method  by  which  it 
could  be  expedited? 


KEGULATION    OF    EAILWAY   RATES.  33 

Mr.  Pkouty.  If  you  will  take  away  from  the  Commission  its  other 
duties  and  leave  to  it  simply  its  administrative  duties  as  a  Connnis- 
sion  you  will  have  added  very  much  to  its  capacity  for  work.  I 
think,  too,  if  the  Commission  were  to  proceed  as  a  conimission  proper, 
and  not  as  a  court — it  has  proceeded  too  much  as  a  court — it  would 
make  much  greater  expedition.  Take  the  testimony  in  this  live-stock 
case.  I  took  it,  and  I  sat  there,  and  Judge  Baxter,  who  was  for  the 
railways,  sat  there  day  after  day.  It  kept  us  a  month  in  taking  that 
testimony.  I  said  to  Judge  Baxter,  "You  know  all  about  it,  and  I 
know  all  about  that,  and  the  Commis'^ion  knows  all  about  it.^^  Now, 
what  is  the  use  of  our  staying  here  to  take  this  testimony?  "  The 
judge  replied,  "  Of  course'  you  and  I  know  all  about  it,  and  your 
associates  do,  and  there  is  no  dispute  about  the  fact  anyway,  but  I 
h'dve  to  make  the  record  for  the  court."  That  has  been  one  trouble — 
that  we  have  been  making  a  record  for  the  court. 

The  Chairman.  Would  j^ou  do  away  with  that? 
Mr.  Prouty.  Certainly  I  would.     I  think  the  Commissioners  should 
sit  down,  and  should  simply  get  at  the  facts  in  a  case. 

The  Chairmax.  And  not  bother  himself  about  making  a  record 
or  about  hearing  long  arguments? 

Mr.  Pkouty.  No;  he  should  get  at  every  fact  in  the  case;  he  should 
hear  all  there  is  to  be  said  about  the  case.  But  he  is  not  the  court, 
and  he  ought  not  to  make  a  record  for  any  court,  in  my  judgment. 
You  take  that  ^Alchita  case  which  I  referred  to — the  case  of  sugar 
differentials.  There  was  a  case  that  we  decided  in  a  month.  It 
was  a  complex  case,  and  yet  I  undertake  to  say  that  we  never  decided 
a  case  where  the  record  was  any  more  complete  than  that  record  was. 
I  required  them  to  file  their  briefs  within  ten  days.  They  all  said 
that  they  could  not  do  it,  but  we  never  had  better  briefs  than  were 
filed  in  that  case.  You  can  get  along  if  you  say  you  must  get  along, 
jincl  a  commission  can  move  faster  than  a  court. 

The  Chairman.  You  suggest  by  your  testimony  the  theory  that  a 
commission  could  take  care  of  the  interests  of  the  public  more  expe- 
ditiously than  a  court  would  do  it,  and  hence  I  have  been  a  little 
anxious  to  know  what  the  reason  has  been  for  what  appeared  to  be 
the  very  slow  progress  on  the  part  of  the  Commission  in  deciding 
cases.  I  am  glad  to  have  you  explain  that  situation  to  some  extent. 
I  think  that  is  all.  ' 

Senator  Keax.  You  stated  that  you  had  made  up  a  table  of  the  rail- 
roads owned  by  different  individual  systems  controlling  about  65 
per  cent  of  the  mileage  of  the  country. 

Ml'.  Prouty.  I  haven't  it  here ;  I  have  it  at  the  office,  and  I  would 
be  very  glad  to  file  it  as  a  part  of  my  testimony. 

Senator  Kean.  I  wish  you  would.  Then,  Ihere  is  one  other  ques- 
tion I  have.  You  stated  that  all  of  the  opinions  of  the  Supreme 
Court  of  the  United  States  had  dealt  with  questions  of  law  and  not 
Avith  questions  of  fact. 

Mr.  Prouty.  No;  I  don't  think  I  said  just  that. 

Senator  Kean.  The  decisions  were  founded  on  questions  of  law. 

Mr.  Prouty.  In  reviewing  our  cases  I  think  that  is  so. 

Senator  Kean.  I  call  your  attention  to  the  cattle  case. 

Mr.  Prouty.  Yes;  I  have  in  mind  that  case. 

Senator  Kean.  That  was  decided  on  a  question  of  fact  ? 

74lA— 05 .3 


34  EEGUIoATIOX    OF    RAILWAY   RATES. 

Mr.  Prouty.  Xot  against  the  Commission.  The  decision  of  the 
Commission  on  the  question  of  fact  was  sustained.  'The  court  held 
that  certain  other  facts  appeared  in  the  case  which  rendered  it  im- 
possible to  execute  the  order  of  the  Commission,  and  sent  the  case 
back  for  farther  proceedings.  The  Commission  had  held  in  that 
case  that  of  the  added  $2  terminal  charge,  $1  was  improperly  im- 
posed. The  court  held  with  the  Conunission  on  that  proposition,  btit 
it  appeared  that  from  certain  territory  the  rate  had  been  reduced 
after  the  imposition  of  the  charge,  and  the  court  held  that  niasmuch 
as  that  territory  could  not  be  distinguished  from  the  other  territory 
the  order  of  the  Commission  could  not  be  enforced,  and  the  case  was 
sent  back,  as  I  say,  for  further  proceedings,  and  further  proceedings 
are  being  had  in  the  case  now. 

Mr.  Commissioner  Fifer.  That  the  through  rate  over  certain  terri- 
tory was  an  offset  to  the  permanent  charges. 

Senator  Kean.  So  it  is  stated  here.  It  was  decided  on  a  question 
of  fact,  however,  and  not  upon  a  question  of  law. 

Mr.  Prouty.  It  has  been  stated  here  that  discriminations  are  the 
serious  thing.  I  am  told  that  there  are  no  advances  in  rates  which 
are  complained  of.  I  want  to  deny  that  most  emphatically.  I  tliink 
the  serious  questions  which  confront  the  Commission,  and  which 
have  confronted  the  Commission  in  the  last  three  or  four  years,  are 
questions  of  advances  of  rates — questions  where  the  only  thing  com- 
plained of  was  the  advance  in  rates. 

Senator  Kean.  Wouldn't  vou  claim  that  the  Commission,  if  it  had 
the  power  to  revise  rates,  would  also  have  the  power  to  raise  them  ? 

Mr.  Prouty.  I  do  not  tliink  thev  would.  Thev  might  in  some 
cases.    The  railroad  would  have  the  power  to  raise  the  rates. 

Senator  Iveax.  The  Commission,  if  it  had  the  power  to  fix  the  rates, 
would  it  not  have  the  power  to  say  that  the  rate  was  too  low  and  to 
lower  it? 

Mr.  Prouty.  But  the  Pennsylvania  Railroad  would  not  ha^e  to  go 
to  the  Commission  and  ask  leave  to  raise  the  rate.  It  would  raise 
the  rate  to  start  with. 

Senator  Kean.  Do  you  think  that  the  people  of  the  country  would 
want  you  to  declare  that  the  rate  was  too  low  ? 

Mr.  Prouty.  Xo,  sir. 

Senator  Keax.  You  think  they  are  on  a  declining  scale,  and  not  on 
a  rising  one  ? 

Mr.  Prouty.  I  think  the'rates  to-day  are  on  a  rising  scale. 

Senator  Keax.  I  mean  the  Commission,  and  not  the  rates. 

Mr.  Prouty.  Well,  the  Commission  ought  to  be  in  favor  of  a  just 
scale,  whatever  that  is.  The  peach  growers  of  Georgia  complained 
to  us  that  the  rates  were  too  high.  I  heard  a  gentleman  here  this 
morning  say  that  there  never  had  been  any  complaint  of  high  rates 
with  the  peach  growers  of  Georgia. 

Senator  Keax.  He  said  he  thinks  the  freight  rate  is  absolutely 
right,  but  he  thought  the  icing  charges  might  be  too  high. 

Mr.  Prouty.  I  understood  him  to  say  that  there  never  had  been 
any  complaint  of  the  freight  rates.  In  j^oint  of  fact,  the  peach 
growers  of  Georgia  complained  to  the  Commission  that  the  rate  was 
too  high. 

Senator  Keax.  Was  it  the  peach  growers  of  Georgia  ? 


REGULATION    OF    EAILWAY   EATES.  35 

Mr.  Proutt.  The  peach  growers. 

Senator  KEA^^  Was  it  not  the  commission  merchants? 

Mr.  Prouty.  Oh.  no :  the  commission  merchants  did  not  do  it  at 
all.  The  growers  themselves  came  in  before  the  Commission,  and 
we  tried  that  case  and  heard  it  and  decided  that  the  rate  was  low 
enough  and  it  ought  not  to  be  any  lower. 

Mr.  Commissioner  Flfer.  That  is.  a  part  of  it. 

Mr.  Prouty.  We  decided  that  the  rate  £rom  Xew  York  to  Boston 
was  too  high. 

Senator  Dollhter.  ]\Ir.  Prouty.  I  have  l:)een  interested  in  your 
statements  that  the  Commission  at  present  exercises  certain  contra- 
dictory functions,  and  you  have  suggested  the  transfer  of  certain  of 
the  present  duties  of  the  Commission  to  somebody  else.  You  have 
certain  duties  in  relation  to  the  prevention  of  offenses  against  the 
interstate-commerce  law.  have  you  not  ? 

Mr.  Prouty.  I  think  so. 

Senator  Dolliver.  Xow.  to  what  Department  of  the  Government 
would  you  suggest  the  transfer  of  those  duties  ? 

Mr.  Prouty.  If  those  duties  alone  were  to  be  transferred  it  seems 
to  me  they  shoidd  go  to  the  Attorney-General,  to  the  Department 
of  Justice. 

Senator  Dolliver.  You  have  certain  duties,  of  inquiry  and  investi- 
gation, and  to  what  Department  of  the  Government  would  you  trans- 
fer those  ? 

Mr.  Prouty.  I  think  that  the  duty  of  conducting  the  inquiry  or 
i-ather  I  should  think  that  the  duty  of  holding  an  inquiry  should  be 
left  with  the  Commission.  The  duty  of  asking  for  the  inquiry  or 
determining  whether  the  inquiry  shall  or  shall  not  be  conducted 
should,  it  seems  to  me.  go  to  the  same  Department  as  the  executive 
functions,  biu  I  think  the  Commission  should  still  have  power  to 
compel  the  attendance  of  witnesses  and  take  testimony ;  but  it  should 
be  done  at  the  request  of  some  other  department,  not  on  the  initiative 
of  the  Conxmission. 

Senator  DoLLI^■ER.  You  have  exercised,  and  I  think  with  very  great 
value  to  the  public,  a  certain  j^ower  of  arbitration,  of  conciliation 
between  the  public  and  the  carriers.  Would  you  desire  to  have  those 
powers  retained  in  the  Commission  I 

Mr.  Prouty.  I  would  not  desire  to  make  any  reconxmendation  that 
they  be  taken  from  the  Commission,  but  I  suggest  to  you  it  might 
be  better  if  those  powers  were  taken  away  and  placed  with  some 
other  department. 

Senator  Dollr-er.  And  after  you  have  all  these  powers  transferred 
to  somebod}'  else  the  function  of  the  Commission  would  be  to  settle 
questions  of  rates  and  discriminations  when  they  were  presented  to 
you  ? 

Mr.  Prouty.  Yes. 

Senator  Dollia-er.  Xow.  I  have  taken  the  opportunity  during  the 
winter  of  reading  through  the  Interstate  Commerce  Commission  re- 
ports, and  I  have  been  impressed  by  the  fact  that  notwithstanding 
they  lack  the  power  to  fix  rates,  which  are  complained  of,  neverthe- 
less your  Commission  has  exercised  a  very  useful  function  in  the 
Government,  and  I  have  been  wondering  whether  it  would  not  be 


36  REGULATION    OF    RAILWAY    RATES. 

policy  to  continue  tl|e  Commission  with  substantially  the  same 
poAvers  and  duties  which  it  now  exercises  and  to  create  in  addition 
to  the  Interstate  Commerce  Commission  a  tribunal  to  sit  in  judgment 
upon  these  questions  of  rates  for  the  future  and "  discriminations, 
leaving  this  higher  commission  a  commission  which  might  be  called 
a  "  commission  of  interstate  commerce  appeals,"  in  a  quiet  atmos- 
phere undisturbed  by  the  business  of  the  detective,  the  prosecutor, 
or  the  inquisitor  of  any  sort — just  to  pass  judgment  on  this  rate 
question.     What  would  vou  say  to  that  idea? 

Mr,  Prouty.  That  meets  my  suggestion  exactly,  only  it  must  be  a 
commission.     It  can  not  be  a  court. 

Senator  Dolliver.  I  think  it  would  greatly  weaken  this  situation 
to  have  these  powers  of  inquiry  in  the  Department  of  Justice  or  in 
the  Department  of  Commerce  and  Labor  removed  from  the  atmos- 
phere that  surrounds  the  present  Interstate  Commerce  Commission. 
You  would  think  there  is  some  sense  in  the  opinion,  then,  of  just 
continuing  the  present  Commission  in  the  exercise  of  its  present  pow- 
ers, possibly  increasing  them  somewhat,  at  least  defining  them  some- 
what, and  creating  a  commission  administrative  in  character,  purely, 
above  the  present  Interstate  Commerce  Commission  to  pass  judgment 
uj)on  questions  of  rates  and  discriminations? 

Mr.  Prouty.  I  see  no  objection  at  all  to  that  suggestion. 

Senator  Cullo:m.  Would  not  that  be  running  at  cross  purposes  ? 

Mr.  Prouty.  No;  that  commission  would  have  no  power  to  pass 
on  any  questions  unless  complaint  was  brought  by  the  Interstate  Com- 
merce Commission  or  somebody  else.  You  might  make  it  simply  an 
appellate  commission. 

Senator  Cullom.  Yes. 

Mr.  Prouty.  The  objection  to  that  is  that  it  takes  up  so  much  time. 

Senator  Cullom.  So  far  as  the  Commission  is  concerned  I  would 
have  it  of  original  jurisdiction,  and  let  the  question  be  raised  by  the 
other  commission. 

Mr.  Prouty.  All  I  contend  for  is  some  tribunal  that  can  pass  on 
these  questions  and  give  effective  relief.  I  think  that  you  ought  to 
make  that  tribunal  just  as  fair  as  3'ou  can  make  it. 

Senator  Cullom.  Plow  many  people  ought  to  sit  on  that  higher 
tribunal  ? 

Mr.  Prot'ty.   I  have  always  thought  three  was  enough. 

Senator  Cullom.  ~\\'oukl  that  adequatelv  represent  the  whole  coun- 
try ? 

Mr.  Prot:ty.  I  do  not  know  what  you  mean  by  that. 

Senator  Cullo^h.  Are  not  these  questions  likely  to  become  terri- 
torial in  character? 

Mr.  Prouty.  Then  you  ought  not  to  represent  the  whole  country, 
because  it  would  be  very  unfortunate  if  a  commissioner  was  to  have 
a  particular  opinion  because  he  came  from  a  particular  territory. 

Senator  Cullom.  I  know,  but  you  take  the  IVIaximum  Rate  Case, 
and  it  was  essentially  a  fight  between  the  Mississippi  Valley,  or  at 
lease  the  western  country,  and  the  Atlantic  seaboard  cities.  Might 
it  not  be  a  good  idea  to  have  these  commissioners  so  distributed  as  to 
get  the  point  of  view  of  the  various  sections  of  the  country  ? 

Mr.  Prouty.  I  think  the  members  of  our  Commission,  if  we  are 
the  initiating  body,  probably  ought  to  be  distributed.     I  do  not  think 


EEGULATION    OF    RAILWAY   EATES.  37 

the  members  of  the  appeUate  commission  ought  to  be  distributed.  I 
think  thev  ought  to  be  entirely  removed  from  every  consideration  of 
that  sort. 

Senator  Cullom.  Would  you  suggest  a  larger  salary  for  such  an 
appellate  commission  ? 

Mr,  Prouty.  I  speak  noAv  as  an  individual  and  not  as  an  Interstate 
Commerce  Commissioner.  I  think  all  Government  officials  are  under- 
paid. I  think  you  are  underpaid  and  I  think  the  judges  are  under- 
paid and  I  think  the  Interstate  Commerce  Commission  is  underpaid, 
but  I  do  not  see  any  propriety  in  paying  an  Interstate  Commerce 
Commissioner  any  more  than  you  pay  a  Federal  judge. 

Senator  Cullo^i.  But  ought  not  those  people  to  be  people  of  large 
affairs,  great  business  men  with  jDersonal  knowledge  of  the  practical 
details  of  American  businesss,  and  would  it  be  possible  to  induce  men 
of  such  business  qualifications  to  give  their  attention  to  public  affairs 
without  a  salary  someAvhat  corresponding  to  the  salaries  paid  in  the 
business  world  ? 

Mr.  Prouty.  There  has  been  a  proposition,  I  believe,  made  to  pay 
the  members  of  the  Interstate  Commerce  Commission  $10,000.  I  do 
not  think  that  $10,000  would  secure  a  better  Interstate  Commerce 
Commissioner  than  would  $7,500.  If  a  man  is  big  enough  to  be  an 
Interstate  Commerce  Commissioner  and  wants  to  be  one  it  w^ould 
hardly  make  any  difference  to  him  whether  he  got  $7,500  or  $10,000. 
He  ought  to  have  enough  so  that  he  can  live. 

Senator  Cullom.  If  he  was  getting  ten  or  fifteen  thousand  dollars 
in  private  business,  he  would  not  have  any  motive  to  go  into  the 
Interstate  Commerce  Commission. 

Mr.  Proi;ty.  You  might  say  the  same  thing  about  the  Federal 
judges. 

Senator  Xewlaxos.  Does  not  this  require  an  experience  in  rate 
making,  and  Avould  it  not  be  advisable  to  have  traffic  managers  of 
great  experience  on  this  commission?  Xow,  such  men  get  very  high 
salaries. 

Mr.  Prouty.  In  my  judgment  a  traffic  manager  would  not  make 
a  good  Interstate  Commerce  Commissioner.  I  am  talking  now  about 
the  appellate  commission,  so  called.  I  think  if  you  will  take  any 
railroad  president  who  has  a  competent  knowledge  of  the  manage- 
ment of  his  road,  he  will  tell  you  that  he  would  not  want  a  traffic 
man  on  that  board  unless  he  was  his  traffic  man,  and  if  he  was  his 
traffic  man  he  would  like  to  have  him.  I  believe  that  the  best  board 
would  be  a  board  consisting  either  of  lawyers  or  of  business  men  who 
had  had  some  intellectual  training.  A  man  must  have  a  certain 
amount  of  intellectual  training  to  tit  him  for  that  place.  He  must 
also  have  a  certain  amount  of  expert  knowledge.  The  expert  knowl- 
edge he  will  get  by  working  there  for  three  or  four  years.  The  in- 
tellectual training  does  not  come  to  him  unless  it  comes  to  him  as  a 
result  of  his  previous  life.  I  express  the  opinion  with  great  hesita- 
tion, but  I  do  not  think  that  a  board  of  traffic  men  would  make  a 
good  appellate  commission.  I  do  think  if  you  had  seven  Inter- 
state Commerce  Commissioners  as  the  initiating  board  it  would  be 
w^ell  to  have  one  traffic  man  on  it  and  one  financial  man,  I  take  it, 
perhaps,  but  so  far  as  that  is  concerned  the  traffic  men  in  this  coun- 
try who  know  about  traffic  are  not  all  paid  $50,000  a  year,  you  Iniow. 


38  EEGULATIOISr    OF    RAILWAY   RATES. 

Senator  Cullom.  You  do  not  take  to  this  extremely  high  salary- 
business,  do  3"on,  either  ? 

Mr.  Prouty.  I  do  not,  unless  I  am  getting  the  salary. 

Senator  Clapp.  In  regard  to  the  provisions  of  the  law  which  you 
would  suggest,  I  think  you  suggest  that  you,  of  course,  would  make 
provisions  for  a  few  of  the  orders  fixing  the  substituted  rate.  Xow, 
ought  there  not  to  be  the  same  jDro visions  for  reviewing  the  action  of 
the  Commission  in  the  condemnation  of  the  existing  rate  ? 

Mr.  Prouty.  VThj,  it  seems  to  me  that  the  condemnation  of  the  ex- 
isting rate  and  the  fixing  of  the  new  rate  are  essentially  the  same 
thing'. 

» 

Senator  Clapp.  Yes;  subject  to  the  same  principle.  Do  you  think 
that  the  rate  when  it  is  fixed  should  be  by  law  for  a  certain  definite 
length  of  time  ? 

Mr.  Prouty.  No;  I  do  not  think  it  should  be  fixed  for  a  certain 
length  of  time,  but  I  do  think  there  is  no  objection  to  saying  that 
when  the  carrier  has  observed  that  rate  for  a  certain  length  of  time  it 
has  the  same  right  to  change  it  as  it  has  to  change  every  other  rate, 
subject,  of  course,  to  the  same  right  of  review. 

Senator  Clapp.  Would  you  fix  that  time  by  law,  or  leave  it  to  the 
earner  ? 

Mr.  Prouty.  Well,  it  sounds  like  a  nonsensical  proposition,  but  I 
have  always  said  that  if  the  carrier  were  obliged  to  accept  the  judg- 
ment of  that  tribunal  and  put  in  that  rate  it  would  answer  the  same 
purpose  as  though  it  were  obliged  to  observe  it  for  a  certain  length  of 
time. 

Senator  Clapp.  First  have  the  carrier  accept  that  rate  and  put  it 
into  effect  and  let  it  become  the  condition  as  to  that  road? 

Mr.  Prouty.  Yes. 

Senator  Clapp.  And  then  if  the  carrier  thought  that  conditions 
had  changed  so  as  to  require  another  rate,  let  the  carrier  initiate  that 
other  rate,  subject  to  the  same  authority  of  the  Commission  to  chal- 
lenge and  reduce  or  fix  as  they  did  before? 

Mr.  Prouty.  Yes ;  it  has  always  been  my  opinion  that  that  would 
work  out  all  right.  The  principal  thing  is  to  substitute  the  judg- 
ment of  somebody  else  for  the  judgment  of  the  carrier. 

Senator  Clapp.  And  that  being  once  done  and  efiectiveh'  done,  it 
would  still  preserve  the  elasticity  in  adjusting  rates  to  varying  con- 
ditions, to  allow  the  carrier  to  change  that  by  initiatinij  a  new  rate 
at  his  own  peril. 

Mr.  Prouty.  As  I  have  said,  it  sounds  like  a  ridiculous  proposition 
to  say  that  after  the  Commission  has  been  to  the  trouble  of  determin- 
ing the  rate  that  the  carrier  may  change  it  the  next  day,  having  put 
it  in  for  one  day.  but  you  must  assume  that  people  are  going  to  act 
in  good  faith  in  this  world,  and  it  seems  to  me  that  you  would  have  ac- 
complished all  you  desired  to  accomplish  by  a  provision  of  that  sort. 

Senator  Clapp.  The  plan  of  Senator  Dolliver  of  an  appellate  com- 
mission, except  as  to  the  distribution  of  the  first  functions,  is  prac- 
tically 3^our  theory  ? 

Mr.  Prouty.  Practically  what  I  have  always  contended  for. 

Senator  Newlands.  Your  plan  does  not  involve  an  appellate  com- 
mission, but  a  division  of  the  Commission  into  two  bodies— one  a 
prosecuting  body  and  the  other  a  quasi  judicial  bod3\ 


REGULATION    OF   RAILWAY   RATES.  39 

Mr.  Prouty.  What  I  think  yon  must  accomplish  is  to  create  in 
some  other  way  a  body  which  shall  be  absolutely  free  from  all  partisan 
interest. 

Senator  Newi.ands.  It  would  make  little  difference  whether  that 
was  a  new  body  or  whether  certain  functions  were  taken  from  this 
Commission  leaving  tliis  Commission  clothed  with  that  function. 

]Mr.  Prouty.  I  w\ant  to  say  this :  I  have  only  one  hope  in  this  mat- 
ter and  tliat  is  that  you  will  define  the  powers  of  the  Interstate  Com- 
merce Commission.  We  have  been  trying  to  find  out  for  eight  years 
what  power  we  have  and  we  do  not  know  yet.  I  hope  you  will  tell 
me  Aviiat  I  have  got  to  do,  and  if  you  tell  me  what  I  have  got  to  do, 
if  I  sta}^  on  the  Commission,  I  will  try  to  do  it  and  to  be  satisfied 
with  it. 

Senator  Newlands.  Judge  Prouty,  regarding  the  organization  of 
this  Commission,  your  idea  is  that  three  members  will  be  sufficient 
for  a  commission  whose  duties  are  to  be  limited  as  you  suggest? 

Mr.  Prouty.  I  have  alwavs  thought  so. 

Senator  Newlands.  Xow,  the  contention  of  the  carriers  is  that 
a  very  large  number  of  men  are  emplo^^ed  in  rate  making;  that  these 
men  run  all  the  way  from  the  local  freight  agent  up  to  the  traffic 
managers,  and  they  come  in  intimate  contact  with  the  communities 
which  they  serve,  and  know  their  wants  and  conditions,  feel  the  com- 
mercial pulse  of  the  country,  and  communicate  with  each  other,  and 
in  that  way  get  a  vast  amount  of  information  and  experience  that 
fits  them  for  ^his  duty ;  and  they  insist  upon  it  that  a  board  of  this 
kind,  of  only  a  few  members,  would  be  overloaded,  and  so  forth. 
Now,  did  you  ever  think  of  enlarging  the  Interstate  Commerce  Com- 
mission in  such  a  way  as  to  provide  for  branches — two  or  three  in 
each  one  of  the  rate-making  centers  of  the  country  ?  As  I  understand 
it,  there  are  five  or  six  rate-making  centers  in  the  country,  such  as 
San  Francisco,  Chicago,  St.  Louis,  Boston,  New  York,  etc.  Did  you 
ever  think  of  the  suggestion  that  these  Commissioners  would  be  as 
close  to  the  conuuercial  conditions  of  the  country,  or  approximately 
as  close,  as  the  traffix  managers,  so  as  to  act  expeditiously? 

Mr.  Prouty.  We  have  often  discussed  in  the  Commission  the 
advisability  of  establishing  a  branch  in  Chicago,  and  perhaps  in 
San  Francisco.  I  do  not  think  that  would  be  necessary  in  San 
Francisco,  because  San  Francisco  is  not  an  interstate  rate-making 
center.  At  the  present  time  it  is  doubtful  if  the  Commission  would 
be  justified  under  the  law  in  doing  it. 

Senator  Newlands.  I  am  asking  now  if  it  could  be  done  ? 

Mr.  Prouty.  I  speak  only  for  myself,  but  I  think  it  would  be  of 
great  value  if  the  Commission  had  a  permanent  abiding  place  in 
Chicago,  in  Kansas  City,  and  perhaps  in  New  York  City. 

Senator  Newlands.  In  addition  to  the  one  here? 

Mr.  Prouty.  Certainly.  A  place  into  which  the  shipper  could 
come,  and  where  he  could  sit  clown  Avith  a  representative  of  the  Com- 
mission. The  Commission  would  come  into  closer  touch  with  the 
railway  operations  and  the  commercial  operations  of  the  country, 
and  a  great  many  shippers  would  present  complaints  in  that  case  who 
never  do  so  now. 

Senator  Newlands.  Now,  in  that  case,  if  you  had  Commissioners 
who  were  located  in  such  rate-making  centers,  they  would  belong  to 


40  EEGULATION    OF    EAILWAY    EATES. 

the  quasi-judicial  board  which  directs  them,  or  belong  to  the  execu- 
tive and  prosecuting  board? 

Mr.  Prouty.  I  should  certainh^  think  they  belong  to  the  executive 
and  prosecuting  board. 

Senator  Newlands.  Xow,  as  to  the  constitution  of  the  Commission 
from  that  point  of  view,  do  you  not  think  that  we  could  provide  for 
the  selection  of  men  who  had  been  trained  at  rate  making  in  the 
country  to  act  in  that  capacity  in  these  rate-making  centers,  and 
would  it  not  be  an  advantage  over  the  system  of  appointing  for  such 
executive  and  prosecuting  duties  men  simply  trained  in  the  law  ? 

Mr.  Prouty.  Yes.  If  the  Interstate  Commerce  Commission  were 
to  have  a  single  representative  in  Chicago,  to  come  into  touch  with 
the  shippers  and  the  railways  there,  he  ought  to  be  some  man  with  a 
knowledge  of  traffic  conditions.  He  must  either  have  it  originally 
or  he  must  obtain  it. 

Senator  Newlands.  It  does  not  necessarily  follow  that  because  a 
man  has  been  trained  in  the  service  of  one  or  more  railways  when  he 
is  transferred  to  the  service  of  the  United  States  he  would  continue 
to  serve  the  interests  that  had  heretofore  employed  him  ?  You  would 
not  regard  that  as  a  disqiuilification  ? 

Mr.  Prouty.  Not  at  all;  but  a  traffic  man  gets  into  the  habit  of 
looking  at  these  questions  from  a  certain  standpoint.  Now,  an 
Interstate  Commerce  Conmiissioner  should  not  look  at  the  question 
from  his  standpoint.  The  traffic  man  looks  at  the  qviestion  from  the 
standpoint  of  the  railroad  mind.  The  Interstate  Commerce  Com- 
missioner should  consider  it  from  the  standpoint  of  the  railroad  mind 
and  the  whole  public. 

Senator  Newlaxds.  But,  if  such  a  traffic  man,  with  intimate 
knowledge  of  rates,  Avere  transferred  to  the  service  of  the  Govern- 
ment and  public,  would  he  not  be  likely  to  look  out  for  the  interests 
of  the  governing  public,  even  though  he  had  that  training? 

Mr.  Prouty.  He  ought  to  do  so.     I  do  not  see  why  he  should  not. 

Senator  Xewlands.  Xow,  as  to  the  powers  of  the  Interstate  Com- 
merce Commission,  vou  sav  vou  have  been  engaged  in  constant  ef- 
fort  to  ascertain  what  your  powers  were  ? 

Mr.  Prouty;  Yes,  sir. 

Senator  Xewlaxds.  Then  I  think  your  criticism  is  entirely  just  as 
applied  to  the  original  act  of  1SS7,  that  it  would  seem  to  limit  your 
jjowers  merely  to  providing  for  the  forms  of  schedules  and  arranging 
for  the  filing  of  schedules,  and  publicity,  and  so  forth,  and  also  for 
the  institution  of  damage  suits  at  the  instance  of  persons  claiming 
damage;  but  the  statute  of  1891  seems  to  enlarge  those  powers  and 
give  you  this  power : 

And  the  Commission  is  hereby  authorized  and  required  to  exec-ute  and  enforce 
provisions  of  this  act ;  and  upon  the  request  of  the  Commission  it  shall  be  the 
duty  of  any  district  attorney  of  the  United  States  to  whom  tlie  Connnission 
may  apply,  to  institute  in  the  proper  court  and  to  prosecute  under  the  direction 
of  the  Attorney-General  of  the  United  States  all  necessary  proceedings  for  the 
enforcement  of  the  provisions  of  this  act. 

Xow,  will  you  kindh'  state  what  the  Commission  does  regarding 
those  proceedings  in  court  after  a  complaint  has  been  filed  l^y  the 
Commission  ? 

Mr.  Prouty.  Xoav,  the  powers  of  the  Commission  relate  to  two  dis- 
tinct subjects-matter.     One  thing  is  the  compelling  of  an  observance 


EEGULATION    OF    KAIL  WAY   EATES.  41 

by  the  carriers  of  published  tarilis:  another  thing  is  the  correction  of 
discrimination  in  the  tariif.  Now.  do  yon  want  to  know  what  the 
Commis:-ion  has  done  to  j^revent  the  payment  of  rebates,  or  do  you 
want  to  know  what  the  Commission  does  with  the  comphiints  that  are 
made  before  it  as  to  discriminations  in  the  tariif  rate? 

Senator  Newlands.  T  would  like  to  know  what  you  do  as  to  both, 
simply  the  form  of  procedure  as  in  the  courts. 

^Ir.  Prouty.  In  respect  to  the  compelling  an  observance  of  the 
pul)lished  schedules,  and  a  prevention  of  rebates,  there  are  just  two 
things  we  can  do.  We  can,  of  course,  o-q  out  and  ferret  out  testi- 
mony.  We  can  not  do  that  personally,  but  we  can  employ  agents 
to  do  it.  We  can  hold  investigations.  We  can  put  these  traffic  men 
on  the  stand;  we  can  ask  them  to  produce  their  books  and  their 
papers,  and  we  can  turn  the  evidence  which  we  obtain  in  to  the 
Attorney -General.  Now,  while  the  act  sajs  that  the  district  attorney 
shall  prosecute  under  our  direction,  if  you  read  it  carefully  it  comes 
to  this :  That  all  we  can  do  is  to  pass  over  to  the  Department  of  Jus- 
tice the  evidence  which  we  obtain. 

When  I  first  came  onto  the  Interstate  Commerce  Commission,  I  used 
to  see  continually  in  the  newspapers  statements  like  these:  "Rates 
sadly  demoralized,"  "Agreement  between  railroad  officers  to  restore 
rates."  and  everything  of  that  sort.  I  said  to  my  associates,  "  Gentle- 
men, this  thing  will  not  do ;  we  must  stop  the  payment  of  these  rebates." 
They  said.  "  How  are  you  going  to  stop  the  payment  of  the  rebates?  " 
I  said,  "■  We  are  going  to  call  these  gentlemen  before  us ;  we  are  going  to 
put  them  under  oath,  and  we  are  going  to  make  them  admit  they  paid 
these  rebates,  and  we  are  going  to  use  the  evidence  which  we  obtain  to 
convict  them."  We  emploj'^ed  Mr.  l^ay,  who  is  now  with  the  Depart- 
ment of  Justice.  The  rates  which  have  been  almost  uniformly  demor- 
alized have  been  the  grain  rates  from  Chicago  to  the  Atlantic  seaboard. 
We  called  in  the  chief  traffic  officials  of  all  these  lines  and  we  put  them 
inider  oath.  Now.  I  would  ask  these  gentlemen.  "Are  you  the  chief 
traffic  official  of  this  road  ?  *"  "  I  am.''  "■  Would  you  know  it  if  a 
rebate  was  paid?"  "I  would."  "Are  any  rebates  paid  on  your 
road?  "  "  There  are  none."  '"  The  rates  are  absolutelv  maintained?  " 
"  They  are." 

Well,  every  traffic  official  who  came  before  us  in  that  capacity — and 
we  prosecuted  it  for  three  daj^s  at  Chicago — testified  that  rates  were 
absolutely  maintained. 

Senator  Newlands.  How  manj''  did  you  have  before  you? 

Mr.  Prouty.  We  had  the  official  of  every  trunk  line  leading  from 
Chicago  to  New  York. 

Senator  Neavlands,  Did  you  have  the  officials  of  the  lines  west  of 
Chicago  ? 

Mr.  Prouty.  Not  at  that  time. 

Senator  Newlands.  I  understand  that  most  of  the  rebates  were 
there. 

Mr.  Prouty.  I  do  not  know  whether  they  were  or  not.  Now,  they 
all  testified  the  rates  were  absolutely  maintained  from 'Chicago  to 
New  York.  Two  years  after  that  I  examined  the  chief  traffic  officer 
of  the  Baltimore  and  Ohio,  and  of  the  New  York  Central — do  not 
think  it  was  the  same  man  in  either  case — and  of  the  other  lines,  and 
thev  all  testified  that   rates  had  never  been  maintained.     I   Avould 


42  REGULATION    OF   RAILWAY   RATES. 

like  to  know  what  I  could  do  as  Interstate  Commerce  Commissioner 
to  make  those  tjentlemen  admit  that  the_y  paid  rebates,  and,  as  tlie}^ 
would  not  tell  that  they  paid  rebates,  I  would  be  glad  to  know  how 
1  could  obtain  evidence  that  the}'  did. 

Having  gotten  througli.  Senator,  with  the  lines  between  Chicago 
and  Xew  York,  we  said  perhaps  this  is  not  a  fair  sample.  Now,  we 
will  go  up  in  the  Xorthwest.  and  we  Avill  take  the  lines  that  carry 
flour  from  ^Minneapolis  east.  AVe  instituted  another  investigation, 
and  Ave  went  up  into  the  XortliAvest,  and  Ave  put  the  railroad  and 
the  traffic  men  of  the  millers  on  the  stand,  and  they  all  SAvore  Avithout 
exception  that  the  rates  Avere  ab-olutely  maintained.  One  traffic 
official  there,  Avhen  it  got  a  little  bit  hot  for  him,  became  sick  enough 
so  that  he  threAv  up  his  dinner,  but  he  did  not  throAv  up  the  truth. 
We  could  not  get  the  admission  from  auA'  man  there  that  they  had 
ever  paid  a  rebate.  We  said,  "  This  does  for  the  East ;  now  let  us  go 
West."  So  Ave  Avent  into  the  Pacific  coast,  to  Portland,  Oreg.,  and 
Avent  oA^er  exactly  the  same  i^erformance  there.  AYe  made  one  man  ad- 
mit that  he  burned  up  his  books  rather  than  to  present  them  to  the 
Interstate  Connnerce  Commission,  but  Ave  could  obtain  no  admission 
of  the  payment  of  any  rebate  there.  ''  Well,"  Ave  said,  "  gentlemen, 
this  is  a  farce.  This  makes  light  of  serious  matters.  AYe  Avill  not 
proceed  further  in  this  direction." 

Now,  it  so  happened  that  there  Avas  a  traffic  association  in  the 
SoutliAvest.  called  the  St.  Louis  Southwestern  Traffic  Committee,  or 
traffic  association.  It  has  had  a  great  many  different  names,  and  I  do 
not  remember  the  exact  name  under  which  it  went  at  that  time.  This 
traffic  association  incorporated  in  the  articles  of  association  the  pro- 
vision that  officers  of  that  association  should,  if  possible,  obtain  evi- 
dence of  the  payment  of  rebates  and  present  that  evidence  to  the 
Interstate  Commerce  Commission.  They  hired  a  young  gentleman 
by  the  name  of  Camden,  and  put  him  at  the  head  of  the  association. 
Thev  not  only  made  him  subscribe  to  the  articles  of  association, 
but  they  put  him  under  oath,  and  compelled  him  to  swear  that  he 
would  obserA'e  that  provision  to  lay  before  the  Interstate  Commerce 
Commission  any  evidence  that  he  got.  He  had  not  been  there  more 
than  tAvo  or  three  Aveeks  before  he  found  some  CA^dence  to  the  effect 
that  the  Baltimore  and  Ohio  Eailroad  had  been  departing  from  the 
published  rate.  He  supposed  his  oath  meant  something,  and  he  came 
up  to  Washington  and  laid  that  evidence  before  the  Interstate  Com- 
merce Commission,  and  Ave  began  proceedings  against  the  Baltimore 
and  Ohio  Eailroad. 

Now,  that  was  the  first  instance  from  the  time  I  came  onto  the 
Commission  that  Ave  could  obtain  any  evidence  of  a  departure  from 
the  published  rate. 

Senator  Neavlands.  Then  what  happened  ? 

Mr.  Prouty.  I  am  going  to  tell  you  Avhat  Ave  did  then.  AYe  di- 
rected the  Baltimore  and  Ohio  road  to  file  a  statement  showing  what 
shipments  they  had  made  during  a  certain  time,  and  the  rate  of 
freight  paid  them  for  the  transportation.  It  was  necessary  to  do 
that  in  order  to  connect  up  with  the  evidence  that  we  had.  '  There- 
upon they  filed  a  statement  showing  a  great  many  departures  from 
the  published  rate.  At  the  same  time  they  sent  to  the  Interstate 
Commerce  Commission  a  letter.     They  said  in  that  letter — now,  I 


EEGULATION    OF    RAILWAY    RATES.  43 

repeat  from  memory;  I  maj^^  get  it  a  little  wrong — but  they  said,  in 
substance,  in  that  letter,  that  the  roads  in  the  territory  in  which  they 
operated  had  habitually  departed  from  the  published  rate ;  that  was 
after  they  had  sworn  they  maintained  the  published  rate  in  that  ter- 
ritory :  ''  Now,  for  us,  the  receivers  of  the  Baltimore  and  Ohio,  we 
have  gotten  through,  but  we  can  not  maintain  the  rate  unless  our 
competitors  maintain  the  rate.  AVe  propose  from  this  time  on  to 
maintain  the  rate  ourselves,  and  we  propose  to  see  that  they  maintain 
it ;  but  in  order  that  we  may  do  that,  we  ask  you  to  call  a  conference 
of  the  railroad  presidents  in  trunk-line  territory." 

NoA\',  the  Commission  did,  acting  on  that  suggestion,  invite  every 
president  of  the  trunk-line  railroads  to  come  to  Washington.  They 
came,  all  of  them.  Mr.  Calloway  was  there  for  the  New  York  Cen- 
tral ;  Mr.  Thompson  was  there  for  the  Pennsylvania  Railroad ;  Mr. 
Murray  and  Mr.  Cowan  came  there  for  the  Baltimore  and  Ohio ;  Mr. 
Harris  came  from  the  Philadelphia  and  Reading,  and  Mr.  Walters 
was  there  for  the  Lehigh  Valley.  I  do  not  remember  them  all,  but 
they  all  came  there.  Those  gentlemen  all  said:  "  It  is  true;  we  have 
departed  from  the  published  rate.  We  did  not  like  to  do  it,  but  Ave 
did.  But  we  have  gotten  through.  We  shall  depart  from  the  pub- 
lished rate  no  more.  If  you  gentlemen  will  only  let  bygones  be  by- 
gones, we  assure  you  that  in  the  future  there  will  be  no  discrimination 
under  this  law,"  * 

Well,  I  exj)ect.  perhaps,  that  we  ought  to  have  said  to  them,  "  You 
are  a  j^ack  of  consummate  liars ;  we  do  not  believe  anything  you  say, 
and  we  will  prosecute  you  if  we  can.''  But  we  did  not  think  so ;  we 
believed  exactly  what  they  said,  and  we  told  them  we  did,  and  they 
went  home  and  no  prosecutions  were  begun  on  the  facts  which  we  had 
against  the  Baltimore  and  Ohio.  Then  we  called,  at  the  request  of 
certain  persons  in  the  West,  the  presidents  of  all  those  lines,  and 
they  all  came.  Mr.  Marvin  Hewitt  came ;  ]Mr.  Bird,  of  the  Milwau- 
kee line,  came:  in  all,  30  or  40;  and  we  had  the  same  sort  of  an  ex- 
perience meeting  again.  They  all  said :  *'  We  have  sinned,  but  we 
have  got  through.  Now.  gentlemen,  just  help  us  to  maintain  the  act 
to  regulate  commerce."  We  said:  "We  will  do  it."'  And  they  went 
home. 

Now,  I  do  not  wish  to  pass  any  criticism  at  all  on  these  gentlemen. 
I  have  not  the  slightest  doubt  that  they  meant  precisely  what  they 
said.  I  think  I  know  something  about  the  difficulties  under  which 
they  labored;  but  they  did  not  maintain  those  rates  for  a  month, 
probably.  The  thing  went  along  in  that  way  until  the  fail  of  the 
3'ear  1901,  or  about  one  year  after  this  first  meting  with  the  presi- 
dents. We  then  obtained  evidence  of  a  departure  from  the  published 
rate  in  the  transportation  of  packing-house  products  and  grain. 
They  wanted  to  say  once  more:  "  We  will  stop  if  3'ou  will  let  us  go." 
But  we  said :  "  No,  gentlemen,  we  have  heard  this  story  once,"  and 
went  to  the  court  and  obtained  injunctions  against  these  roads, 
because  of  departure  from  the  published  tariil.  We  passed  the 
evidence  which  we  had  over  to  the  Department  of  Justice.  I  want 
to  say  most  emphatically  that  since  I  have  been  on  the  Interstate 
Commerce  Commission,  with  the  single  exception  of  the  evidence 
which  we  had  against  the  Baltimore  and  Ohio  Railroad,  I  have  never 


44  EEGULATION    OF    EAILWAY   BATES. 

known  of  any  way  we  conld  obtain  evidence  AvhicU  I  have  not  used, 
and  if  the  evidence  could  be  obtained  and  transmitted  to  the  proper 
person 

Senator  Xewlands.  The  Commission  had  no  doubt  that  rebates 
were  going  on  all  this  time  ? 

Mr.  Peouty.  I  have  not  the  slightest  doubt. 

Senator  Newlaxds.  You  so  stated  in  your  report? 

Mr.  Prouty.  That  was  stated  in  our  reports,  and  it  has  been  so 
admitted  since.     These  same  men  have  admitted  it  since. 

Senator  Xewlaxds.  You  instituted  this  action  to  enjoin  the  com- 
pany in  equity  ? 

Mr.  Prouty.  "NVe  did. 

Senator  Newlakds.  These  western  roads? 

Mr.  Prouty.  And  the  eastern  roads,  too;  some  of  them. 

Senator  Xeavlaxds.  The  trunk  lines? 

Mr.  Prouty.  Some  of  the  trunk  lines.  AVe  took  all  those  that  we 
had  anv  evidence  against. 

Senator  Newlands.  You  enjoined  them  from  this? 

Mr.  Prouty.  For  a  departure  from  the  published  tariff. 

Senator  Ne-\\tl,ands.  Now,  we  have  been  told  that  the  judge  him- 
self was  doubtful  as  to  his  jurisdiction  in  that  case. 

Mr.  Prouty.  Well,  novr,  the  Commission  was  very  doubtful  as  to 
the  jurisdiction  in  that  case,  but  we  thought  w^e  ought  to  try  it.  It 
might  be  of  some  service.  We  were  bound  to  do  all  Ave  could  to  stop 
that  thing,  and  we  adopted  that  plan. 

Senator  Xewlaxds.  The  companies  themselves  made  no  contest,  did 
they  ? 

Mr."  Prouty.  AAliy,  yes;  they  objected.  It  was  a  nominal  objec- 
tion, and  we  were  really  asked  by  some  lines  not  embraced  in  the  in- 
junction to  be  taken  in.     They  wanted  to  be  enjoined. 

Senator  Newlands.  But  there  was  no  real  contest  either  in  the 
court  or  in  the  appellate  court,  was  there,  over  the  question  of  juris- 
diction? And  was  the  injunction  granted  before  the  Elkins  Act  was 
passed  ? 

Mr.  Prouty.  The  injunction  was  granted  before  that  act,  and  the 
provision  you  referred  to  had  gotten  into  that  act,  because  of  the 
doubt  we  entertained  on  the  Commission  as  to  the  jurisdiction  of  the 
court.  Judge  Logan  asked  me  to  draw  the  l)ill.  and  in  doing  that  I 
incorporated  that  provision,  because  of  the  doubt  we  had  on  the  Com- 
mission, and  while  Judge  Logan  threw  my  bill  away  and  dreAV  one  of 
his  own,  he  retained  that  provision  and  added  to  it  the  provision  that 
other  parties  might  be  brought  in. 

Senator  Xewlands.  Now.  JNIr.  Prouty,  if  your  Commission  came 
to  the  conclusion  that  you  could  bring  a  bill  of  injunction  to  restrain 
these  companies  from  departing  from  the  published  rate,  why  could 
it  not  have  brought  or  instituted  the  same  sort  of  suit  to  enjoin  these 
com2:>anies  from  discrimination  of  all  kinds  which  are  forbidden  by 
the  interstate-commerce  act? 

Mr.  Prouty.  Because,  in  the  first  place,  the  court  is  simply  required 
to  enforce  a  positive  enactment  of  the  statute.  The  statute  says  you 
shall  publish  your  rate  and  you  shall  maintain  that  rate.  Having 
published  the  rate,  the  law  itself  compels  the  observance.  All  the 
court  is  required  to  do  is  to  compel  the  compliance  with  the  statute. 


REGULATION    OF    RAILWAY   RATES.  45 

In  the  other  case  the  court  must,  to  correct  the  discrimination,  deter- 
mine the  rate  for  the  future. 

Senator  Xeavla>s^ds.  Now,  the  court  must  determine.  That  is  your 
contention  ? 

Mr.  PuouTY.  That  is  my  contention. 

Senator  XEWLA^"DS.  But  you  never  instituted  such  a  proceeding, 
did  you  ? 
.  Mr.  Prouty.  Certainly :  we  brought  that  Missouri  Pacific  case. 

Senator  Xewlaxds,  Was  that  before  the  passage  of  the  IClkins  Act, 
in  1003  ? 

Mr.  Prouty.  That  was  done  before  I  came  on  the  Commission;  I 
found  that  suit  pending  when  I  came  on  the  Commission. 

Senator  Xewlaxds.  And  that  was  an  action  for  injunction? 

Mr.  Prouty.  Yes.  sir. 

Senator  Xeavlaxds.  To  prevent  the  railroads  from  charging  a 
greater  rate  to  "Wichita  than  to  Omaha? 

Mr.  Proi'ty.  Yes.  sir. 

Senator  Xewlaxds.  Xow,  what  is  the  result  of  that  case?  Did  the 
court  declare  it  had  no  jurisdiction? 

Mr.  Prouty.  The  courts  below  took  jurisdiction:  before  the  case 
was  decided  in  the  Supreme  Court  of  the  United  States  the  Elkins 
bill  had  been  passed.  As  I  understand  the  case,  the  court  said  it 
would  have  had  no  jurisdiction  but  for  the  Elkins  bill. 

Senator  Xewlaxds.  So  that  entirely  absolved  you  then  from  any 
failure  to  attempt  to  employ  the  process  of  injunction? 

Mr.  Prouty.   We  did  attempt  to  employ  the  process  of  injunction. 

Senator  Xewlaxds.    In  that  one  case? 

Mr.  Prouty.  In  that  case.  Of  course,  we  would  not  have  employed 
it  in  any  other  case  until  we  had  a  decision  in  that  case. 

Senator  Xeavlaxds.  That  case  was  instituted  in  what  year? 

Mr.  Prouty.  All  I  know  about  it  is  this:  The  case  was  pending 
when  I  came  onto  the  Commission,  and  we  made  on  two  or  three  oc- 
casions special  efforts  to  hurr^"  that  case  along,  but  it  seemed  to  meet 
with  a  series  of  misfortunes. 

Senator  Xeavlaxds.  I  understand  that  it  is  contended  b}'  some  of 
the  representatives  of  the  carriers  here  that  the  courts  had  ample 
jurisdiction  in  this  matter.  Just  as  they  had  the  jurisdiction  to  en- 
join against  this  system  of  rebates,  so  they  had  jurisdiction  to  enjoin 
against  discrimination.  ancL  that  "the  Interstate  Commerce  Commis- 
sion failed  in  the  discharge  of  their  duties  in  not  instituting  any  such 
proceedings.     You  say  you  instituted  one  in  1902  ? 

Mr.  Prouty.   Yes,  sir. 

Senator  Xeaa^laxds.  Just  about  a  year  after  the  passage  of  the  act 
of  1901 ? 

Mr.  Prouty.  Yes,  sir. 

Senator  Xeaa^laxds.  Are  there  any  other  suits  of  that  nature  ? 

Mr.  Prouty.  Xo. 

Senator  Xeaa^laxds.  And  you  had  to  wait  for  five  years  before  you 
got  a  determination  of  that  ? 

Mr.  Prouty.  More  than  five  years. 

Senator  Xeavlaxds.  Would  it  not  have  been  well  to  have  brought 
other  suits  of  the  same  nature  ? 

Mr.  Prouty.  We  were  yerj  doubtful  about  the  jurisdiction.     I 


46  .  EEGULATIOX    OF    RAILWAY    RATES. 

have  never  been  able  to  see  if  the  court  took  jurisrdiction  it  would 
help  matters.  I  do  not  see  how  the  Commission  is  in  any  better 
shape  now  with  the  decision  than  withoiii. 

Senator  Xewlands.  We  will  admit  that.  You  assume  that  you 
have  a  right  to  go  into  court  to  ask  for  an  injunction  concerning  a 
railroad  discriminating  in  favor  of  one  place  as  against  another,  and 
that  discrimination  consists  of  exacting  a  rate  of  5  cents  a  hundred, 
say,  in  one  case,  less  than  in  another.  Now,  that  is  the  discrimination 
complained  of,  and  in  determining  that  case  you  must  determine 
the  amount  of  the  discrimination  necessary? 

Mr.  Proitty.  Yes,  sir. 

Senator  Newlands.  If.  then,  the  court  is  to  grant  full  and  adequate 
relief,  would  it  not  necessarily  include  the  determination  of  what 
a  fair  rate  was,  and  an  injunction  against  anj'thing  in  excess  of  that 
rate  ? 

Mr.  Prouty.  That  is  my  contention. 

Senator  Newlands.  Has  not  the  court  yielded  to  that  contention? 

Mr.  Prouty.  The  court  would  have  no  power.  Senator,  to  grant 
that  relief,  because  it  has  no  power  to  determine  for  the  future  what 
is  a  fair  rate. 

Senator  Neavlands.  Has  the  Supreme  Court  ever  declared  that  ? 

Mr.  Prouty.  I  understand  it  has. 

Senator  Neavlands.  I  presume,  of  course,  it  will  be  admitted  that 
the  Supreme  Court  can  not  fix  a  rate. 

Mr.  Prouty.  But  it  fixes  that  rate. 

Senator  Newlands.  The  Supreme  Court  has  the  power  to  deter- 
mine what  is  a  reasonable  rate.  It  has  the  power  to  protect  against 
extortion,  and  that  necessarily  means  the  determination  of  what  is  a 
reasonable  rate,  it  seems  to  me.  I  will  ask  you  whether  the  Supreme 
Court  has  ever  passed  upon  that  question  ? 

Mr.  Prouty.  The  Supreme  Court  has  never,  to  my  knowledge, 
passed  upon  that  question  in  that  form.  The  Supreme  Court  has 
said  in  several  cases  that  the  fixing  of  a  rate  for  the  future  was  an 
administratiA^e  or  a  legislatiA^e  function.  It  has  held  in  case  of  the 
Commission  itself  that  where  the  Commission  attempted  to  do  pre- 
cisely what  you  say  the  court  ought  to  do  that  would  be  a  fixing  of  a 
rate  by  the  Commission  and  not  within  the  power  of  the  Commission. 
Now,  if  that  is  a  fixing  of  the  rate  when  it  is  done  by  the  Commission, 
I  fail  to  see  Avhy  it  Avould  not  be  a  fi^^ing  qf  the  rate  when  done  by  the 
court. 

Senator  Neavlands.  And  that  has  been  your  assumption,  and  that 
has  been  the  reason  Avhj'  you  have  not  brought  many  of  these  injunc- 
tion suits? 

Mr.  Prouty.  Yes,  sir. 

Senator  Neavlands.  Noav,  as  to  that  Wichita  case,  it  Avent  back  to 
the  inferior  court,  did  it  not  ? 

Mr.  Prouty.  Yes,  sir. 

Senator  Neaaxands.  Hoav  long  ago? 

Mr.  Prouty.  Well,  I  do  not  remember ;  two  or  three  years  ago. 

Senator  Neaa'lands.  Has  that  case  been  terminated? 

Mr.  Prouty.  No  ;  it  has  not. 

Senator  Neavlands.  ^yeU.,  why  not? 

Mr.  Prouty.  So  far  as  I  am  concerned — my  associates  may  speak 


REGULATION    OF    RAILWAY    RATES.  47 

for  themselves — I  never  understood  that  the  Elkins  bill — I  say  three 
years — I  have  never  understood  that  the  Elkins  bill  added  anything 
to  our  power  to  create  a  discrimination  in  a  published  schedule,  and 
therefore  my  attention  has  never  been  called  to  that  matter.  I  have 
also  assumed  that  the  decisions  of  the  Supreme  Court  of  the  United 
States  made  since  the  institution  of  that  suit  were  rather  conclusive 
of  the  fact  that  that  discrimination  alleged  in  a  suit  was  not  an  un- 
due discrimination,  and  therefore  not  in  violation  of  the  act  to  regu- 
late commerce.  In  other  words,  when  we  began  that  suit  we  held 
that  the  only  sort  of  competition  which  would  justify  charging  less 
at  a  more  distant  point  than  at  an  intermediate  point  was  that  of 
some  carrier  over  whom  the  interstate  lavr  exercised  no  control. 

Now,  the  Supreme  Court  of  the  United  States  has  said  that  all 
kinds  of  competition  must  be  taken  into  account — competition  with 
other  railroads  whicli  are  subject  to  the  jurisdiction  of  the  railway  act, 
or  competition  of  markets;  everything  of  that  kind  must  be  taken  into 
account.  The  Commission  has  held  in  other  cases,  and  it  is  undoubt- 
edly true,  that  there  are  competitive  conditions  on  the  Missouri  River 
which  justifj^  a  lower  rate  than  is  made  to  Wichita.  And  I  assume 
that  the  thing  complained  of  in  the  JNIissouri  case  was  not  in  violation 
of  laAv,  That  has  been  my  reason  for  not  proceeding  in  that  case. 
Of  course,  I  have  had  no  doubt  of  the  power  of  the  court  to  proceed 
vrith  that  case.  I  think  the  court  should  do  with  that  case  exactly 
what  the  Commission  could  do  by  law,  neither  more  nor  less. 

Senator  Newlands.  Then  you  think  it  could  not  grant  the  relief 
necessary  ? 

Mr.  Prouty.  I  think  it  could  not  grant  the  necessary  relief  unless, 
as  Senator  Dolliver  suggested,  the  only  thing  to  be  done  Avas  to  re- 
strain the  Missouri  Pacific  from  charging  a  higher  rate  to  Wichita 
than  it  charged  to  Onuiha.  If  that  was  the  only  thing  to  be  done,  I 
am  not  at  all  clear  that  the  court  might  not  secure  that  by  injunction. 

Senator  Newlands.  But  your  opinion  is  that  it  could  not  determine 
that  an  intermediate  rate  was  a  reasonable  rate  and  enjoin  everything 
above  that? 

Mr.  Prouty.  I  do  not  know.  I  do  not  think  you  could  say  that  the 
rate  to  Wichita  is  5  cents  above  the  rate  to  the  JMissouri  Kiver. 

Senator  Newlands.  Could  you  not  test  that  in  the  Supreme  Court  ? 

Mr.  Prouty.  I  could  not  say  it  could  not  be  tested.  It  has  been 
tested.  I  say  if  the  court  could  exercise  the  jurisdiction  over  any- 
thino;  of  that  sort  it  would  be  as  well  for  this  committee  to  write  into 
a  bill  that  statement. 

Senator  Dolliver.  We  did  that  in  the  Elkins  law,  or  tried  to  do  so. 

Mr.  Prouty.  I  did  not  understand  it  that  way. 

Senator  Newlands.  Let  us  refer  to  the  language  of  the  Elkins  Act. 

The  Elkins  Act  was  passed  in  1903.     Section  3  of  the  Elkins  law 

states  that — 

That  whenever  the  Interstate  Commerce  Commission  sliall  have  reasonable 
ground  for  belief  that  any  common  carrier  is  engaged  in  the  carriage  of  pas- 
sengers or  freight  traffic  between  given  points  at  less  than  the  published  rates 
on  file,  or  is  committing  any  discriminations  forbidden  by  law,  a  petition  may 
be  presented  alleging  such  facts  to  the  circuit  court  of  the  United  States  sitting 
in  equity  having  jurisdiction ;  and  when  the  act  complained  of  is  alleged  to  have 
been  committed  or  as  being  committed  in  part  in  more  than  one  judicial  dis- 
trict or  State,  it  may  be  dealt  with,  inquired  of,  tried,  and  determined  in  either 
such  judicial  district  or  State,  whereupon  it  shall  be  the  duty  of  the  court  sum- 


48  EEGULATION    OF    E  AIL  WAY   EATES. 

marily  to  iuquii-e  into  the  circnmstanees.  upon  such  notice  and  in  such  manner 
as  the  court  shall  direct  and  without  the  furiner  pleadings  and  proceedings 
applicable  to  ordinary  suits  in  equity,  and  to  make  such  other  persons  or  cor- 
porations party  thereto  as  the  court  may  deem  necessary,  and  upon  being  satis- 
fied of  the  truth  of  the  allegations  of  such  petition,  said  court  shall  enforce  an 
observance  of  the  publislied  tariffs  or  direct  and  require  a  discontinuance  of 
such  discrimination  by  proper  oi-devs,  writs,  and  process,  which  said  orders, 
writs,  or  process  may  be  enforceable  as  well  against  the  parties  interested  in  the 
traffic,  as  against  the  carriers,  sanject  to  the  right  of  appeal,  as  now  nrovided  by 
law. 

Now,  there  a  clear  j)ower  is  given  to  the  court  to  direct  and  require 
a  discontinuance  of  such  discrimination.  I  understand  that  your 
contention  is  that,  according  to  decisions  of  the  Supreme  Court,  a 
discrimination  of  this  kind  betAveen  localities  because  of  competition 
of  any  kind  is  not  forbidden  bv  the  law  ? 

Mr.  Prouty.  Oh,  no.  The  discrimination  might  be  forbidden  by 
the  law  and  might  not.  That,  under  the  decision  of  the  Supreme 
Court,  is  a  question  of  fact.  Now,  my  point  is  that  the  court  has 
no  power  to  inquire  whether  or  not  that  discrimination  is  undue 
and  to  prescribe  the  rented}'. 

Senator  Newlaxds.  It  says  that  the  court  shall  have  the  power  to 
require  a  discontinuance  of  discrimination.  Now,  if  the  discrimina- 
tion consists  in  charging  a  higher  rate  for  the  shorter  distance  than 
for  the  longer  distance,  can  not  the  court,  under  this  law,  require  a 
discontinuance  of  such  discrimination? 

Mr.  Prouty.  I  think  it  could  in  that  case,  because  in  that  case  the 
statute  f)rescribes  the  rule  by  which  the  court  acts.  The  statute  saj^s 
that  the  carrier  shall  not  charofe  more  for  the  short  than  for  the  lonir 
haul.  Now',  if  the  carrier  did  get  more  for  the  short  than  for  the 
long  haul,  I  have  no  doubt  that  the  court  under  that  provision  of 
law  could  stop  the  discrimination,  could  stop  the  higher  charge  at 
the  intermediate  points.  But  the  fourth  section  contains  another 
provision,  which  is  that  it  may  charge  more  at  the  intermediate 
point  if  circumstances  and  conditions  are  different  at  the  more  dis- 
tant point.  Now.  if  circumstances  and  conditions  were  such  that 
the  carrier  might  properly  charge  a  higher  rate  at  the  intermediate 
point,  I  do  not  think  the  court  could  determine  how  much  higher 
that  rate  should  be;  and  if  the  rate  was  higher  than  it  should  be, 
could  not  therefore  reduce  the  rate  because  there  is  no  standard  by 
which  it  acts? 

Senator  Newlands.  And  yet  that  precise  point  has  never  really 
been  determined  by  the  court? 

Mr.  Prouty.  Nearly,  Senator.  Let  me  tell  you  what  has  been  de- 
termined. The  fifteenth  section  of  the  act  provides  that  the  Com- 
mission shall  hear  these  complaints.  Having  heard  the  complaint, 
if  they  find  that  the  carrier  is  in  violation  of  the  law,  they  shall  order 
the  carrier  to  cease  and  desist  from  such  violation.  That  is  the  power 
of  the  Interstate  Commerce  Commission. 

Senator  Newlaxds.  ^^-liere  do  you  say  that  is? 

Mr.  Prouty.  That  is  in  the  fifteenth  section,  on  page  15  of  what 
I  have  here.  The  Interstate  Connnerce  Commission  is  given  the 
power  to  order  the  carrier  to  cease  and  desist  from  that  violation. 
Now,  the  Supreme  Court  has  held  that  that  does  not  give  the  Inter- 
state Commerce  Commission  power  to  remove  or  make  an  order  which 
will  remove  a  discrimination  of  that  sort.     So  I  say  the  court  has 


EEGULATION    OF    RAILWAY   KATES.  49 

come  mighty  near  to  holding  that  the  language  in  the  Elkins  bill  does 
not  give  the  court  that  power.  And  j'ou  will  understand,  Senator, 
that  gives  no  power  at  all  over  the  unreasonable  rate. 

Senator  XEWLA^^DS.  If  in  this  statute  we  could  give  the  court  the 
power  to  determine  that  without  giving  the  Commission  the  power  to 
fix  the  rate,  would  the  remedy,  in  your  judgment,  be  adequate  for 
unjust  discrimination? 

Mr.  Prouty.  I  think  it  would  be  adequate  for  unjust  discrimina- 
tion if  the  court  had  any  constitutional  right  to  exercise  its  remedy. 
The  court  has  no  constitutional  right  to  do  it,  and  could  not  exercise 
that  power.     That  is  my  point  exactly. 

Senator  Newlaxds.  There  are  proceedings,  are  there  not,  where 
the  railroad  has  sought  to  enjoin  the  enforcement  of  rates  which  they 
declared  were  uni-easonable  law  ? 

Mr.  Prouty.  Yes ;  that  is.  a  common  proceeding. 
.    Senator  Newlands.  That  is  a  common  proceeding  against  State 
commissions  ? 

Mr.  Prouty.  And  against  State  legislatures. 

Senator  Newlands.  Have  any  proceedings  been  taken  against  the 
action  of  the  Interstate  Commerce  Commission  ? 

Mr.  Prouty.  No  occasion  for  that  kind  of  proceeding,  because  the 
rates  of  the  Interstate  Commerce  Commission  can  only  be  enforced 
by  the  court  upon  application  b}^  itself  or  somebody  interested. 

"^  Senator    Newlands.    Such    proceeding   would    be    by    injunction, 
would  it  not? 

Mr.  Prouty.  By  proceeding  in  equitj^ ;  and  I  suspect  the  court 
would,  in  connection  wnth  that,  proceed  to  grant  an  injunction. 

Senator  Neavlands.  I  understand  your  contention  is  a  rate  that  is 
unreasonable  is  destructive  of  the  rights  of  property  of  the  carrier, 
and  a  rate  that  is  unreasonable  is  destructive  of  the  rights  of  property 
of  the  shippers  ? 

Mr.  Prouty.  Yes,  sir. 

Senator  Neavlands.  Now,  why  should  not  the  shipper  have  the  same 
right  also  to  proceed  by  injunction? 

Mr.  Prouty.  He  should. 

Senator  Neavlands.  Has  he  that  right  now  ? 

Mr.  Prouty.  Well,  that  is  a  question  which  has  not  been  decided 
yet.  Judge  Niles  held  that  he  had  not,  and  Judge  Speer  held  that 
he  had. 

Senator  Neavlands.  The  matter  has  never  been  decided  by  the 
Supreme  Court  ? 

Mr.  Prouty.  It  ncA'er  has  gone  to  the  Supreme  Court. 

Senator  Neavlands.  Has  the  Interstate  Commerce  Commission 
itself  ncA^er  sought  to  bring  such  a  suit  ? 

Mr.  Prouty.  I  do  not  say  that  the  Interstate  Commerce  Commis- 
sion w^ould  have  any  such  poAver.  Apparently  the  circuit  or  Federal 
court  only  entertains  suit  in  behalf  of  the  Interstate  Commerce  Com- 
mission when  the  statute  permits  it.  Now,  there  is  no  statute  Avhich 
permits  that  sort  of  proceeding.  I  think  there  ought  to  be  a  statute 
which  would  permit  the  Interstate  Commerce  Commission  to  file  a 
petition  and  ask  for  an  injunction.  In  the  case  of  an  advance  the 
court  Avould  probably  haA^e  the  power  to  grant  an  injunction,  tempo- 
rarily pending  proceedings  before  the  Commission,  although  it  would 
have  no  power  to  permanently  reduce  the  rates. 
741  A— 05 4 


50  EEGULATIOlSr    OF   RAILWAY   RATES. 

Senator  Newlands.  Then,  if  the  Interstate  Commerce  Commission 
was  authorized  to  institute  such  a  suit,  would  this  not  meet  all  these 
questions  as  to  extortionate  rates? 

Mr.  Prouty.  If  the  court  had  the  further  power  to  determine 
whether  that  rate  was  reasonable  or  unreasonable,  and  you  awarded 
final  process  in  the  premises,  provided  the  court  was  a  tribunal  com- 
petent to  exercise  that  function.  I  do  not  think  it  would  amount  to 
anything  to  give  to  all  the  courts  of  the  United  States  that  juris- 
diction. I  think  it  would  answer  the  purpose  if  you  could  give  some 
special  court  that  jurisdiction. 

Senator  Newlands.  A  special  court  of  transportation? 

Mr.  Prouty.  I  thinlc  so,  if  you  could  give  it  that  jurisdiction. 

Senator  Kean.  Could  you  do  so? 

Mr.  Prouty.  I  do  not  think  a^ou  could.  I  have  been  saying  here 
to-day  that  you  could  not  invest  a  court  with  power  to  fix  a  rate  for 
the  future. 

Senator  Newlands.  We  are  proceeding  under  the  fourteenth 
amendment,  which  declares  property  shall  not  be  taken  without 
due  process  of  law.  You  said  that  a  carrier  has  a  right  to  go  into 
court  to  enjoin  the  enforcement  of  a  tariff  fixed  by  the  Commission  on 
the  ground  that  it  is  destructive  of  the  right  of  property. 

Mr.  Prouty.  Yes. 

Senator  Newlands.  And.  on  the  other  hand,  you  say  the  fixing  of 
an  extortionate  rate  is  destructive  of  the  rights  of  property  of  the 
shipper.  If  the  carrier  has  a  right  to  go  into  court  under  the  Consti- 
tution, why  would  not  the  shipper  have  the  right,  if  the  wrong  com- 
plained of  is  the  same  in  each  case  ? 

Mr.  Prouty.  It  is  not  the  same  thing  in  each  case. 

Senator  Newlands.  It  would  be  destructive  of  the  rights  of 
property. 

Mr.  Prouty.  That  is  true.  Say  that  I  go  out  here  and  take  your 
property.  It  is  destructive  of  your  property,  but  you  could  not 
bring  suit  under  the  fourteenth  amendment.  The  taking  of  your 
property  or  my  property  by  a  railroad  rate  is  with  due  process  of 
law.  The  State  has  authorized  that  railroad  to  make  a  rate,  to 
impose  a  rate  upon  me,  and  the  State  must  provide  that  the  rate  is  a 
just  and  reasonable  rate. 

Senator  Newlands.  So  that  you  think  under  existing  conditions 
a  remedy  could  not  be  given  to  the  shipper  which  is  now  clearly 
within  reach  of  the  carrier,  when  his  property  rights  are  unjustly 
afi^ected  ? 

Mr.  Prouty.  I  think  so — that  is,  I  think  the  shipper  should  have 
a  remedy,  but  it  must  spring  from  a  different  source. 

Senator  Newlands.  How  about  the  powers  of  conciliation?  Do 
you  think  that  those  can  be  exercised  to  advantage  ? 

Mr.  Prouty.  Oh,  jes.  I  think  the  best  part  of  the  work  of  the 
Interstate  Commerce  Commission  for  the  last  eight  years  has  been  in 
the  exercise  of  that  power  and  in  the  conducting  of  its  investigations. 
That  has  been  about  the  only  work  it  could  do. 

Senator  Newlands.  Would  you  have  that  power  rest  in  this  board 
that  you  speak  of — by  some  designated  as  an  appellate  board? 

Mr.  Prouty.   No. 

Senator  Newlands.   You  would  have  that  authority  conferred  upon 


REGULATION    OF    RAILWAY   RATES.  51 

a  special  bureau  or  upon  the  other  branch  of  the  Interstate  Commerce 
Commission  ? 

Mr.  Peoitty.  If  you  are  going  to  organize  an  appellate  commission, 
I  see  no  objection  to  leaving  the  preseiit  Commission  as  it  is  exactly — 
that  is,  allow  it  to  discharge  all  the  functions  it  discharges  now. 

Senator  Newlands.  And  you  would  have  them  exercise  this  power 
of  conciliation,  leaving  to  others  the  power  of  judging? 

Mr.  Pkouty.  Simply  the  power  to  hear  and  determine. 

Senator  Newlaxds.  The  criticism  is  made  that  out  of  quite  a  num- 
ber of  cases — I  believe  there  are  120  involving  decisions  of  the  Inter- 
state Commerce  Commission — that  the  courts  have  overruled  the 
Commission  in  almost  everj^  case,  except  four  or  five.  What  explana- 
tion have  you  to  make  of  that? 

Mr.  Proutt.  Well,  as  I  said,  the  only  explanation  is  that  the  Com- 
mission was  wrong.  But  you  can  not  understand  what  the  court 
thought  without  looking  into  the  case  itself. 

Senator  Newlands.  First,  is  that  the  fact? 

Mr.  Prouty.  Now,  I  can  not  give  you  the  exact  figures.  We  have 
sent  up  here  a  statement  which  shows  exactly  what  the  fact  is.  But 
I  would  say  probably  that  out  of  35  or  36  cases  in  some  27  or  28  cases 
the  contention  of  the  Conunission  has  not  been  sustained. 

Now  let  me  illustrate  what  that  means.  Six  of  those  were  cases  in 
which  the  Supreme  Court  decided  that  the  Commission  had' no  power 
to  fix  a  rate  for  the  future.  The  Commission  had  decided  that  a  certain 
rate  was  unjust.  It  had  declared  that  certain  other  rates  would  be 
just.  It  had  ordered  the  carriers  to  observe  that  other  rate.  Now, 
the  court  held  in  those  six  cases  that  the  order  of  the  Commission 
was  unlawful,  because  it  exceeded  the  power  of  the  Commission. 
The  court  did  not  hold,  and  the  court  has  never  held,  that  the  rates 
of  the  Commission  in  those  six  cases  were  unreasonable.  It  has  never 
decided  that  the  judgment  of  the  Commission  upon  the  question  of  fact 
was  not  right.  Now,  I  say.  as  a  practical  matter,  that  the  thing  which 
the  Interstate  Commerce  Commission  undertook  to  do  has  got  to  be 
done,  and  the  proposition  to-day  is  to-  give  the  Interstate  Commerce 
Commission  power  to  do  exactly  that  thing  which  the  court  said 
had  not  been  given  to  it  by  the  original  act.  So  it  does  not  seem  to 
me  that  it  is  anything  particularly  to  the  discredit  of  the  Commission 
to  have  made  that  holding  and  to  have  that  holding  reversed  by  the 
Supreme  Court. 

Senator  Newlands.  Were  there  anv  other  cases  in  which  the  de- 
cision  went  off  practically  on  the  same  point  ? 

Mr.  Pkouty.  Not  on  this  same  point. 

Senator  Newlands.  Not  on  this  point  ? 

Mr.  Prouty.  I  thinic  if  vou  will  look  through  those  cases  you  will 
find  in  fourteen  or  fifteen  cases  the  question  at  issue  was  the  long  and 
short  haul  clause.  The  Commission  had  held  that  competition  of  car- 
riers subject  to  the  law  did  not  justify  departure  from  the  fourth  sec- 
tion. The  court  decided  that  it  did.  Therefore,  the  order  of  the 
Commission  was  unlawful,  but  it  never  has  been  held  by  the  Supreme 
Court  that  the  thing  wdiich  the  Commission  attempted  to  do  in  that 
case,  as  a  matter  of  fact,  ought  not  to  be  done.  Now,  you  take  the 
import  rate  case.  The  question  involved  there  was  just  this:  The 
Texas  Pacific  charged  on  articles  transported  from  New  Orleans  to 


52  EEGULATIOX    OF   KAIL  WAY   RATES. 

San  Francisco  perhaps  one-quarter  when  those  articles  originated 
in  Liverpool  as  much  as  they  did  when  those  articles  originated  in  New 
Orleans.  The  Commission  had  held  that  its  purview  was  bounded 
by  the  ocean  and  it  could  not  look  bej^ond  the  ocean  to  find  out  what 
competitive  tariff  governed  that  traflic.  The  Supreme  Court  simply 
said.  ""  Your  application  of  the  law  is  wrong.  You  must  consider  the 
competitive  condition  abroad  as  well  as  the  competitive  conditions  at 
home." 

Senator  Xewlands.  Outside  of  these  cases,  however,  that  were  con- 
tested in  the  courts  there  were  very  numerous  cases  decided  by  you 
that  were  accepted  by  the  railroads? 

Mr.  Prouty.  In  the  early  daj'S  of  the  Commission  practically  all 
its  orders  were  complied  with.  At  the  present  time,  with  the  present 
state  of  public  sentiment,  any  order  of  the  Interstate  Commerce  Com- 
mission which  does  not  involve  too  much  to  a  railroad  is  pretty 
certain  to  be  complied  with,  just  as  we  are  pretty  certain  that  there 
will  not  be  any  advance  in  rates  as  long  as  this  excitement  concerning 
rates  keeps  up. 

Senator  Newlands.  Can  you  give  any  idea  of  the  number  of  cases 
that  you  have  decided  in  which  the  railroads  have  complied  practi- 
cally^ with  your  decisions  ? 

Mr.  Prouty.  Well,  now.  we  have  sent  up  here  a  statement  which 
shows  exactly  the  number,  and  therefore  I  do  not  like  to  guess  at  it. 
In  the  early  days  they  were  practically  all  complied  with.  There 
are  a  great  many  cases  in  which  the  railroads  did  not  literally  comj^ly 
with  the  decision  where  the  decision  Avas  substantially  complied  with, 
and  I  think  if  it  could  be  done  the  railroads  ought  to  have  that  privi- 
lege. They  sometimes  prefer  to  comply  in  substance  in  one  form 
rather  than  in  another.  For  example,  the  Commission  held  the  dif- 
ferential between  New  England  and  New  York  should  be  10  per  cent 
of  the  rate  between  Chicago  and  New  York.  Now,  the  railroads  did 
not,  comply  exactly  with  that  order,  but  they  put  in  an  arbitrary  dif- 
ferential which  amounted  to  a  substantial  concurrence  with  it.  They 
preferred  to  make  it  in  cents  a  hundred  pounds  rather  than  10  per 
cent. 

Senator  Kean.  That  was  satisfactory,  do  you  think? 

Mr.  Prouty.  That  was  satisfactory. 

Senator  DoLLivER.  Did  anybody  dispute  you? 

The  Chairman.  Did  anybody  dispute  your  rights  to  make  that 
order  ? 

Mr.  Prouty.  No  ;  that  was  in  a  day  when  the}^  were  not  disputing 
our  right.  The  differential  between  JS^ew  England  and  New  York — 
the  Commission  held  that  the  differentials  ought  not  to  exceed  10  per 
cent  of  the  New  York  rate.  They  were  reduced,  and  have  been  ever 
since.  A^Tien  they  were  once  put  into  effect,  actually  complied  with 
by  the  railroads,  they  themselves  saw  they  were  right,  and  they  have 
never  been  taken  out. 

Senator  Newlands.  Mr.  Prout3%  has  the  Commission  the  power  to 
investigate  the  books  of  the  railway  company  ? 

Mr.  Prouty.  The  Commission  has  the  power  to  compel  the  rail- 
way company  to  produce  its  books;  it  has  the  power  to  compel  the 
production  of  those  books  in  court,  but  that  does  not  amount  to  a 
practical  inspection  of  the  books. 


REGtJLATIOiSr    OF    RAILWAY   RATES.  53 

Senator  Newlands.  Do  you  understand  the  Commission  would 
have  the  power  in  connection  with  that  to  have  an  expert  examine  the 
books  with  a  view  to  ascertaining  whether  or  not  the  rebates  were 
granted  ? 

Mr.  Prouty.  I  do  not  think  the  Commission  would  have  the  power 
to  send  an  expert  into  the  office  of  a  railroad  to  examine  its  books. 
I  do  expect  that  any  railroad  company  in  the  United  States  would 
probabh"  permit  an  expert  to  examine  the  books  of  that  company  if 
we  asked  them  to  do  so. 

Senator  Newlands.  It  is  contended  by  the  representatives  of  the 
carriers  here  that  the  rebate  must  show  in  some  form  or  another,  and 
it  is  contended,  as  I  understand  it,  that  if  the  Commission  had  exer- 
cised its  poAvers  of  investigation  and  not  simply  contented  itself  with 
the  examination  of  the  traffic  managers  it  would  have  gotten  evidence 
of  these  rebates.     Now,  how  about  that? 

Mr.  Prouty.  Now,  it  may  be  that  we  could  have  shown  in  some  way 
that  those  gentlemen  were  not  telling  the  truth.  It  is  possible  we 
might  have  done  so.  But,  in  my  judgment,  it  would  have  amounted 
to  nothing  to  examine  their  books  unless  you  had  the  power  to  pre- 
scribe the  method  in  Avhich  those  books  should  be  kept.  We  did 
examine  their  books.  ^Ve  ordered  books  brought  into  court.  We 
ordered  them  to  file  the  fullest  statements.  We  spent  a  week  in  the 
examination  of  their  books  and  movement  of  traffic,  and  everything 
of  that  sort. 

Senator  Newlands.  With  the  view  of  discovering  rebates? 

Mr.  Prouty.  Yes,  sir. 

Senator  Newlands.  And  you  could  not  ascertain  anything  from 
them  ? 

Mr.  Prouty.  No.  sir;  I  desire  to  say  that  tliere  has  been  no  time 
since  I  became  an  Interstate  Commerce  Commissioner  when  if  any 
strong  trunk  line  operating  between  Chicago  and  New  York  had  said, 
"  We  will  pay  no  more  rebates  ourselves  and  we  will  not  suffer  our 
competitors  to  pay  rebates."  the  payment  of  rebates  in  that  section 
would  not  have  stopped.  It  might  have  cost  the  railway  something, 
but  rebates  would  have  ceased.  Nor  has  there  been  a  time  since  I  have 
])een  an  Interstate  Commerce  Commissioner  when  if  the  traffic  officers 
of  the  trunk  lines  between  Chicago  and  the  Atlantic  seaboard  would 
have  consented  to  tell  the  truth  under  oath,  the  Interstate  Commerce 
Commission  would  not  have  stopped  the  payment  of  rebates.  I  have 
been  able  to  discover  no  way  in  which  to  make  them  tell  the  truth. 

Senator  Newlands.  In  regard  to  the  future,  will  it  not  be  possible 
for  them  to  commence  again  this  system  of  rebates? 

Mr.  Prouty.  I  think  they  pay  rebates  now. 

Senator  Newlands.  You  think  they  do? 

Mr.  Prouty.  I  think  they  do. 

Senator  Newlands.  Do  you  think  it  is  as  extensive  as  it  was? 

Mr.  Prouty.  Oh,  no.  I  think  that  the  payment  of  i"ebates,  as 
such,  practical^  ceased  when  the  Elkins  bill  went  into  effect,  and  it 
has  only  been  resumed  in  aggravated  instances  where  apparently 
there  could  not  be  anything  else  done.  For  example,  there  are 
certain  lines  which  handle  grain  from  the  Missouri  Piver  to  Chicago 
and  the  East.  Those  lines  have  buyers  on  their  roads,  which  own 
elevators  at  terminal  points.  They  allow  an  elevator  charge  to  their 
buvers.     Certain  other  lines  which  have  no  elevators,  so  that  thev 


54  KEGULATIOX    OF    RAILWAY   EATES. 

are  unable  to  make  that  allowance  of  an  elevator  charge  to  their 
buyers,  I  think  have  at  times  been  compelled  to  pay  a  rebate  which 
amounted  to  that  elevator  charge. 

Senator  Newla^-ds.  Or  lose  the  business  ? 

Mr.  Proijty.  Or  lose  the  business.  That  is  an  example  of  what  I 
mean.  I  could  not  produce  any  evidence  of  that.  If  I  could  it 
would  be  my  business  to  turn  it  over  to  the  Attorney-General.  I 
have  no  doubt  that  rebates  to  a  greater  or  less  extent  are  paid  in 
many  parts  of  this  country.  And  if  it  turns  out,  as  the  railroads 
contend,  that  the  disclosure  b}^  any  officer  of  a  railroad  gives  the 
company  its  exemption  under  the  Elkins  bill,  your  law  is  good  for 
nothing.  They  can  resume  the  pajanent  of  rebates  whenever  they 
desire. 

Senator  Xewlaxds.  Mr.  Hill.  I  believe,  stated  that  this  matter  of 
rebates  would  require  constant  vigilance. 

Mr.  Prolty.  If  you  want  to  stop  the  payment  of  rebates.  Senator, 
in  my  judgment  you  have  got  to  provide  certain  things.  In  the 
first  j)lace  you  have  got  to  take  care  of  the  terminal  railroad.  You 
have  got  to  take  care  of  the  private  car  lines,  although  that  is  very 
much  overdrawn  just  at  the  present  time.  There  is  not  as  much  to 
this  private  car  line  as  the  newspapers  and  magazines  talk.  You 
have  got  to  take  care  of  the  elevators.  You  have  got  to  do  that. 
Then,  in  my  judgment,  you  have  got  to  provide  that  some  tribunal 
shall  have  authority  to  prescribe  the  form'  in  which  the  books  of 
these  railroads,  Avhich  refer  not  only  to  their  accounts,  but  the  move- 
ment of  their  traffic,  shall  be  kept,  and  to  further  provide  that  that 
tribunal  may  at  any  time  examine  those  books. 

Now,  there  is  just  one  thing  further  that  I  think  might  be  done, 
and  which  should  be  done,  perhaps,  as  the  last  resort.  You  can  pro- 
vide that  the  man  who  receives  and  pays  out  that  money  shall  be 
an  official  of  the  Government.  He  shall  not  have  anything  to  say 
as  to  how  the  mone3^  is  paid  out ;  he  shall  have  nothing  to  do'  with  the 
administration  of  the  road,  but  he  shall  have  the  right  to  receive  and 
pay  out  that  money.     Xow,  I  think  that  would  stop  it. 

Senator  Dolliver.  Unless  they  got  possession  of  the  man. 

Mr.  Prouty.  That  might  be  so.  Still,  gentlemen,  that  will  not 
necessarily  stop  it. 

Now,  I  know  some  years  ago  that  a  trainlpad  of  wheat  was  trans- 
ported from  ]Minneapolis  to  Chicago  for  nothing.  There  was  simply 
no  record  of  that  shipment  on  the  books  of  the  railroad  company 
which  took  it.  The}"  carried  that  trainload  of  wheat  down  there  to 
Chicago,  and  there  was  no  record  of  it  at  all. 

Senator  Cullom.  What  object  had  they  in  doing  that? 

Mr.  Prouty.  They  wanted  to  prefer  the  man  that  had  the  wheat. 
They  did  not  want  to  pay  him  a  rebate  on  his  shij)ments,  but  gave  him 
that  shipment  for  nothing. 

Senator  Neavlands.  What  do  vou  regard  the  g-reatest  evil  in  con- 
nection  with  transportation — this  question  of  rebates  or  this  ques- 
tion of  discrimination  under  the  published  tariff  as  betAveen  localities? 

Mr.  Prouty.  In  the  past  the  rebates  have  been  the  most  serious 
question.  My  own  opinion  is  that  in  the  future  the  discrimination 
in  the  tariff  itself  Avill  be  the  most  serious  question.  Go  into  New 
England  to-day,  and  you  will  find  that  the  tariff  puts  absolutely  into 


KEGULATION    OF    RAILWAY   BATES.  55 

the  possession  of  the  Standard  Oil  Company  every  foot  of  the  terri- 
tory of  the  New  York,  New  Haven  and  Hartford  Kailroad.  You 
will  find  that  class  of  discrimination  all  through  this  country.  I 
think  in  the  future  that  class  of  discrimination  will  probably  be 
more  serious  than  the  question  of  rebates.  That  is  really  not  a  dis- 
crimination against  localities.  Tliat  is  discrimination  as  between 
shippers.  That  is  the  adjustment  of  a  tariff  in  such  a  way  as  to 
prefer  one  shipper  to  another. 

Senator  Newlands.  Do  you  think  there  is  any  great  danger  from 
the  fact  that  men  who  are  lar:^ely  interested  in  these  great  industrial 
corporations  control  certain  railway  lines? 

Mr.  Peouty.  I  do  regard  that  as  the  very  gravest  danger. 

Senator  Newlands.  Is  it  possible  by  the  utmost  vigilance  to  secure 
an  absolute  and  square  deal  as  amongst  shippers  where  great  pro- 
ducers control  the  lines  of  transportation  ? 

Mr.  Prouty.  That  is  a  broad  question.  You  ask  if  it  is  possible. 
It  would  be  pretty  nearly  possible.  It  would  be  possible  if  the  Gov- 
ermnent  took  these  railroads  and  operated  them  to  give  everybody  a 
square  deal.     I  doubt  if  it  will  be  done  otherwise. 

Senator  Newlands.  So  that,  in  your  judgment,  the  only  way  we 
will  ever  secure  absolute  equality  of  service  as  between  shippers 
would  be  under  Government  ownership  ? 

Mr.  Prouty.  Why,  equality  is  a  thing  we  do  not  often  secure  any- 
way. I  do  not  think  there  is  any  trouble  in  securing  a  condition  of 
things  that  is  good  enough  without  Government  ownership.  If  you 
want  absolute  equality,  you  would  probably  get  it  under  Government 
ownership,  although  that  is  by  no  means  certain. 

Senator  New^lands.  Do  you  think  oiFicials  of  the  railroads  could  be 
controlled  certain  ways — for  instance,  bribery,  etc.  ? 

Mr.  Prouty.  Not  just  that.  Somebody  has  got  to  determine  what 
these  rates  are.  Even  if  the  Government  owned  the  railroads  it  is 
not  at  all  certain  that  the  rates  would  be  without  discrimination.  It 
is  pretty  certain  that  everybody  would  pay  the  same  rate  on  the  same 
goods  in  the  same  shipments. 


Friday,  May  10^  1905. 

STATEMENT    OF   HON.  JUDSON  C.  CLEMENTS,  INTERSTATE  COM- 
MERCE COMMISSIONER  OF  THE  UNITED  STATES. 

Senator  Kean  (in  the  chair).  The  committee  will  be  glad  to  listen 
to  you,  Mr.  Clements. 

Mr.  Clements.  Mr.  Chairman  and  gentlemen  of  the  committee,  it 
liad  not  been  my  purpose,  and  certainly  was  not  the  purpose  of  the 
Commission,  so  far  as  I  am  advised,  in  the  beginning  of  these  hear- 
ings, to  ask  for  any  hearing  before  the  committee  on  the  subject  of 
legislation.  The  Commission  has,  since  its  existence,  annually  made 
reports  to  Congress,  as  the  law  peremptorily  requires  it  to  do,  respect- 
ing the  work  of  the  year,  respecting  defects  in  the  law,  and  making 
such  recommendations  and  suggestions  as  may  be  deemed  necessary 
for  the  amendment  of  the  law.  That  is  a  specific  requirement  of  the 
original  act.     The  Commission  has  endeavored,  upon  the  facts  de- 


56  REGULATION"    OF    RAILWAY    RATES. 

veloped  from  year  to  year,  to  make  recommendations  in  compliance 
with  that  duty  put  upon  them,  and  has  given  reasons  therefor. 
This  has  been  done  from  year  to  year  for  a  long  period  of  time,  and 
we  would  have  been  content  to  let  the  matter  rest  there,  so  far  as  any 
theory  of  amendment  is  concerned  or  any  reasons  therefor,  because 
they  have  been  set  out  v^iih  care  and  repeatedly  presented  in  that 
form. 

But  I  have  felt  myself — and  1  have  no  doubt  that  the  other  Com- 
missioners have  felt  the  same  way — that  from  the  beginning  of  these 
hearings  there  has  been  a  continued  effort  to  disparage  the  Commis- 
sion, disparage  its  work  by  insinuation,  by  innuendo,  and  by  one  form 
of  expression  or  another,  upon  generalities  and  without  specifications, 
to  put  the  Commission  on  trial.  One  who  would  read  the  newspaper 
accounts  of  these  hearings — and  these  accounts  are  justified,  as  the 
statements  of  the  gentleman  who  just  preceded  me  indicate — in  saying 
that  this  inquiry  in  respect  of  amendments  to  the  law  has  been  largely 
turned  into  criticism  by  those  witnesses,  if  they  may  be  called  wit- 
nesses— advocates  I  should  say,  mostly — by  the  manner  in  which  they 
have  discussed  this  subject. 

For  illustration,  the  gentleman  who  has  just  taken  his  seat  is  so 
much  encouraged  by  this  atmosphere  of  criticism,  this  contagion 
which  grows  stronger  day  by  day,  as  it  is  uttered  by  one  and  heard 
by  another — :he  has  gone  so  far  as  to  say,  in  effect,  that  recently  some 
of  these  complaints  are  by  invitation  or  solicitation.  Where  is  the 
proof  for  that  charge?  The  gentleman  stands  up  here  resting  under 
the  obligations  of  a  gentleman  to  be  fair  and  just,  having  heard  these 
insinuations  day  by  day  by  the  advocates  of  the  corporations  that  are 
to  be  regulated  in  some  form  or  another,  until  he  grows  bold  enough 
to  charge  that  these  complaints  have  been  brought  upon  solicitation, 
the  inference  necessarily  being  upon  the  solicitation  of  the  Interstate 
Commerce  Commission.  Where  is  his  proof?  Where  is  the  justifica- 
tion that  a  just  and  honest  man  wants  to  present  to  a  fair  and  intelli- 
gent committee  as  a  warrant  for  such  a  statement  as  that? 

I  can  not  undertake  to  reply  in  detail  to  all  these  matters  that  have 
been  going  on.  The  Coinmission  all  of  last  Aveek  was  in  Chicago 
hearing  cases.  We  can  not  do  that  and  read  every  word  that  is  said 
here  from  day  to  day.  I  know  not  what  is  in  these  various  publica- 
tions from  day  to  day  in  large  part.  I  have  looked  into  it  so  far  as  it 
has  been  practicable  to  do  so  consistently  with  the  work  we  have  had 
on  hand,  enough  to  see  some  samples  of  it.  But  I  shall  content 
myself  with  dealing  with  a  few  representative  samples  of  this  charac- 
ter of  misrepresentation,  and  not  undertake  to  consume  your  time  for 
a  week  here  to  follow  gentlemen,  some  of  whom  have  occupied  your 
attention  for  three  days  at  a  time,  mainly  for  the  purpose  of  disparag- 
ing the  Commission,  not  upon  specific  charges,  but  upon  innuendo  and 
insinuation. 

There  is  no  reason  why  this  condition  of  feeling  should  be  mani- 
fested here.  The  Commission  is  required  to  recommend  from  year  to 
year  what  it  finds  and  believes  to  be  needful  of  amendment.  That  is 
what  it  has  done.  The  gentlemen  who  are  casting  these  reflections 
upon  the  Commission  at  this  season  have  never  been  very  much  agi- 
tated by  the  recommendations  of  the  Commission  heretofore.  Why? 
Because  they  have  never  been  brought  forward.     There  has  been  no 


EEGULATIOi:^    OF    KAILWAY    EATES.  57 

serious  proposition  to  amend  the  law.     There  has  been  no  immediate 
probability  that  it  would  be  done. 

'But  last  fall  the  President  of  the  United  States,  impressed  with  the 
conditions  as  they  exist,  put  into  his  message  the  specific  and  pointed 
recommendation  that  the  law  be  amended  in  two  particulars— one  for 
the  suppression  of  rebates  and  other  kindred  discriminations,  and  the 
other  for  the  correction  of  unreasonable  rates. 

Senator  Dolliver.  Judge  Clements,  my  recollection  is  that  it  did 
not  specifically  mention  rebates  or  discriminations,  but  recommended 
simply  that  the  act  of  the  Fifty-eighth  Congress  be  enforced.  My 
recollection  is  that  he  did  not  suggest  any  new  legislation  as  to 
rebates. 

Mr.  Clements.  The  President's  message? 

Senator  Dolliver.  Yes. 

Mr.  Clements.  Well,  I  do  not  know  that  he  specified  any  particular 
form  of  legislation,  but  he  indicated  clearly  that  such  legislation  as 
was  needed  for  the  correction  of  these  two  recognized  evils  should  be 
had.  I  think  vou  will  see,  bv  a  reference  to  the  language  of  it,  that 
that  is  true.  I  do  not  remember  that  there  was  anything  in  it  that 
specifies  that  the  law  had  not  been  enforced  or  that  it  was  based  upon 
any  such  assumption  as  that. 

•    Senator  Dolltver.  I  do  not  think  he  blamed  the  Commission  for 
not  enforcing  the  law,  but  my  recollection  is  as  I  have  stated. 

]VIr.  Cle3Ients.  A^Hien  you  find  that,  Senator,  we  will  come  to  it 
again.  I  have  not  the  message  before  me  now.  What  I  remember 
about  it  is  this :  That  the  annual  recommendations  of  the  Commission 
for  the  last  ten  vears,  which  have  vearly  been  substantiallv  the  same, 
have  not  attracted  any  specific  and  particular  attention  as  being  the 
basis  of  a  probable  early  amendment  of  the  law;  but  when  the  Presi- 
dent of  the  United  States  put  the  matter  into  his  message,  he  brought 
it  up  conspicuously,  and  that  has  been  followed  up  until  it  was 
apparent  that  there  was  a  probability  of  some  legislation. 

It  is  in  that  condition  and  on  that  account  that  these  o-entlemen 
have  seen  proper  to  conduct  their  advocacy  of  their  interests  here  in 
such  a  way  as  to  put  the  whole  blame  on  the  Interstate  Commerce 
Commission.  They  never  manifested  any  feeling  toward  the  Com- 
mission till  now,  when  you  come  to  this  matter;  and  now,  instead 
of  showing  by  argument,  by  facts,  "and  b}^  conditions  that  the  Presi- 
dent is  mistaken,  or  that  Secretar}^  Taft — the  gentleman  a  few 
moments  ago  alluded  to  him — is  mistaken,  or  that  Mr.  Williams,  of 
Mississippi,  is  mistaken,  or  that  Mr.  Bryan  is  mistaken,  with  all  of 
whom  he  is  pleased  to  put  us  in  company,  of  which  I  am  not  ashamed, 
the  matter  has  become  acute.  It  has  loomed  up  in  such  a  way  as  to 
indicate  that  something  practical  will  have  to  be  done  in  the  way  of 
regulation  and  amendment  of  the  law,  and  therefore  it  becomes  a 
matter  to  be  met  by  these  gentlemen  who  resist  that  regulation ;  and, 
instead  of  discussing  the  question  on  its  merits — I  do  not  mean  to 
say  that  they  have  not  done  that — in  large  part  they  have  switched 
off  from  that  and  undertaken  to  switch  your  attention  and  the  public 
attention  from  the  merits  of  the  question  into  an  arraignment  of  the 
Commission. 

For  what?  For  what  is  the  Commission  arraigned  by  these  gen- 
tlemen who  appear  here,  I  say,  not  strictly  as  witnesses,  but  as  advo- 


58  KEGULATIOlSr    OF   RAILWAY   RATES. 

cates?  It  is  because  the  Commission  has  not  enforced  the  law  against 
them.  The  Commission  has  not  stopped  them  from  paying  rebates. 
The  Commission  has  not  paid  rebates.  Every  rebate  that  has  ever 
been  paid  has  been  paid  by  a  raih'oad.  It  is  the  railroads  that  arraign 
the  Interstate  Commerce  Commission  because  it  has  not  compelled 
them  to  quit  committing  crimes  which  they  confess  and  admit,  and 
then  turn  upon  us  and  make  the  charge  that  we  have  not  done  our 
duty  in  compelling  them  to  obey  the  law  I 

Now,  what  is  the  history  of  this  matter  ?  You  have  been  told  by 
Mr.  Hines  that  late  in  the  eighties,  within  two  or  three  years  after 
the  Commission  was  organized,  the  railroads  began  to  ignore  those 
orders.  That  is  true.  They  did  not,  however,  begin  to  ignore  these 
orders  upon  any  contention  that  was  then  made  manifest  that  the 
Commission  did  not  have  jurisdiction  to  make  those  orders,  but  it 
was  upon  the  fact  that  they  knew  that  the  finding  was  only  a  prima 
facie  one,  that  they  would  have  another  trial  in  court,  and  that  they 
would  try  it  over  again,  because  they  did  not  admit  that  the  Commis- 
sion was  right  in  each  case.  I  will  have  more  to  say  about  that  later 
in  connection  with  another  branch  of  the  discussion. 

The  original  act  made  it  a  crime  on  the  part  of  a  railroad  to  pay 
rebates,  but  not  on  the  part  of  the  shipper  to  receive  them.  In  1889 
that  was  amended  so  as  to  make  it  a  misdemeanor  on  the  part  of  the 
shipper  to  receive  rebates.  The  law  contained  a  provision  that  no 
witness  should  be  excused  from  testifying  in  an}'  case  before  the 
Commission  on  the  ground  that  to  do  so  would  tend  to  incriminate 
him,  but  that  his  testimon}-  should  not  be  used  against  him  in  any 
proceeding. 

]\lr.  Counselman.  of  Chicago,  now  deceased,  who  owned  a  large 
elevator,  or,  more  than  one  elevator,  and  was  encaged  in  the  srain 
business,  in  the  capacity,  as  we  understand  it.  of  a  middleman,  was 
called  before  the  Commission  and  was  asked  whether  he  had  received 
rebates  or  not  from  the  railroads,  and  he  declined  to  answer  on  the 
ground  that  to  do  so  would  incriminate  him.  The  Commission  under- 
took to  compel  him  to  answer,  but.  as  you  know,  under  the  law  the 
(Commission  has  no  power  to  punish  for  contempt  or  compel  a  wit- 
ness, but  they  must  stop  the  proceeding  and  go  into  court  and  ask  the 
circuit  court  to  compel  him  to  answer.  The  Commission  undertook 
that,  and  the  court  decided  with  Counselman.  That  case  was  taken 
by  appeal  to  the  Supreme  Court  of  the  United  States,  and  it  was 
held  in  that  case  that  the  witness  could  not  be  compelled  to  answer, 
because,  although  the  statute  undertook  to  give  him  immimity,  it  did 
not  acquit  him  of  liability  to  punishment  and  that  his  testimony, 
which  he  might  be  compelled  to  give,  might  be  used  as  a  clew  to  pro- 
cure other  testimony  on  which  he  could  be  convicted  without  that; 
and  therefore  that  part  of  the  statute  became  a  nullity. 

After  that  the  Commission  Avas  dependent  upon  the  will  of  wit- 
nesses as  to  whether  they  would  tell  about  any  of  these  matters  or  not, 
and  of  witnesses  who  did  know  of  them.  So  when  you  asked  a  wit- 
ness then,  all  he  had  to  say  was.  "  That  will  incriminate  me  if  I 
should  answer,  and  I  will  not  answer."  Under  that  state  of  the  law 
you  can  see  it  was  impossible  to  get  testimony  about  these  matters. 

The  next  step  was  that  the  Commission  asked  Congress  to  pass  a 


REGULATION    OF    RAILWAY    RATES.  59 

law  to  correct  that,  and  Congress  did  so  with  reasonable  promptness, 
providing  that  a  witness  should  not  be  excused,  but  that  he  should 
not  be  punished  for  anj-  ollense  concerning  which  he  might  testify; 
not  simply  that  he  should  not  be  prosecuted,  but  that  he  should  not 
be  subjected  to  indictment  at  all  for  any  matter  to  which  he  testified. 

Thait  was  challenged,  and  we  got  into  court  under  that  law.  It- 
was  said  by  the  able  advocates,  by  those  gentlemen  who  represented 
the  Baltimore  and  Ohio  road,  I  believe  it  was — at  any  rate,  it  was  a 
railroad  witness — that  it  was  not  adequate  protection;  that  to  com- 
pel a  witness  to  tell  of  his  own  misdemeanors  was  to  disgrace  him, 
would  reflect  on  his  reputation,  and  that  he  was  entitled  under  the 
Constitution  of  the  United  States  to  protection  against  that.  But 
the  Supreme  Court  brushed  that  aside  and  said  he  had  ample  protec- 
tion for  all  that  the  Constitution  intended  to  give  him;  that  if  he 
wanted  to  blacken  his  own  character  that  was  his  own  act. 

We  took  steps  several  years  ago  to  test  the  first  law ;  procured  an 
amendment  to  cure  that  defect  after  it  had  gone  all  through  the 
different  courts:  and  then  we  were  met  at  the  threshold  and  again 
compelled  to  go  through  the  same  process  to  the  Supreme  Court. 

There  was  no  idleness  about  this.  It  was  pursued  with  diligence. 
After  that  act  was  passed  we  were  investigating  the  Illinois  Steel 
Company  and  its  connection  with  some  railroads  there,  in  respect 
of  alleged  rebates  in  the  form  of  terminal  charges,  etc.  This  was 
several  years  later.  Then  a  witness  named  Brimson,  an  employee 
on  the  part  of  the  steel  company,  refused  to  answer  on  general 
grounds,  that  the  Commission  had  set  down  a  hearing  on  its  own 
motion  under  a  general  order  for  a  general  inquiry  under  the  twelfth 
section  of  the  act  to  regulate  commerce.  The  witness  was  asked  to 
produce  books  and  papers  from  his  employer's  office.  He  was  ad- 
vised by  counsel  to  object  to  answer,  and  he  did  refuse  to  answer,  not 
on  the  ground  that  it  would  incriminate  him.  He  did  that  it  first, 
and  then  withdrew  it,  and  put  it  on  the  ground  that  the  Commission 
was  not  a  grand  jury  and  had  no  right  to  ask  him  general  questions; 
and  that  atthough  the  twelfth  section  of  the  act  to  regulate  commerce 
did  seem  to  give  the  Commission  authority,  it  was  unconstitutional 
and  void.  So  we  started  in  on  another  series  of  litigation  about 
getting  testimony. 

We  went  to  the  circuit  court,  the  contention  being  that  the  Com- 
mission had  no  case  against  the  witness,  and  that  the  courts  would 
not  lend  themselves  to  become  a  mere  instrumentality  of  the  Com- 
mission to  procure  testimony  for  it;  and  the  circuit  court  held  that 
within  the  Constitution  of  the  United  States  there  was  no  case  in 
controversy  giving  the  court  judicial  authority  and  power  to  act. 

So  that  "came  to  the  Supreme  Court  of  the  United  States  on  appeal 
by  the  Commission.  The  case  was  heard  and  decided,  the  opinion 
of  the  majority  of  the  Supreme  Court  being  in  favor  of  the  conten- 
tion of  the  Commission,  and  that  the  witness  should  be  compelled 
to  answer. 

So  here  were  these  strung-out  contests  from  year  to  year,  from  one 
court  to  another,  on  one  ground  and  another,  and  after  the  law  was 
amended  in  order  to  get  a  basis  upon  which  to  get  an  answer  from  a 
witness. 


60  EEGULATIOISr    OF    RAILWAY   EATES. 

Senator  Newlands.  When  was  that  last  case  concluded  ? 

Mr.  Clements.  I  do  not  remember  the  year.  It  was  perhaps  as 
far  back  as  1898.  I  would  not  undertake  to  give  the  year  exactly. 
Those  three  cases  covered  quite  a  number  of  years.  Possibly  it  was 
1896,  instead  of  1898,  as  some  gentleman  suggests  here. 

Only  last  year  we  had  an  inquiry  in  New  York  in  the  coal  case,  in 
which  a  witness  refused  to  produce  books,  papers,  and  contracts,  and 
refused  to  answer  certain  questions.  So  the  Commission  had  to 
suspend  the  inquiry  and  go  to  court  and  ask  for  a  compulsory  process 
to  require  the  witness  to  answer.  That  case  was  argued.  The  in- 
vestigation was  suspended,  and  the  matter  went  on  for  several  weeks 
or  possibly  months,  for  there  was  a  decision  whether  the  witness 
could  be  compelled  to  give  testimonj''  or  to  produce  books  and  papers. 
The  ruling  was  against  the  Commission,  and  we  appealed  it  to  the 
Supreme  Court,  and  there  the  ruling  was  in  favor  of  the  contention 
of  the  Commission,  that  they  were  compellable  and  must  give  the 
testimony.  Then  the  case  had  to  be  set  again,  and  we  had  to  go 
back  and  take  the  testimon3\ 

Along  last  fall,  when  we  were  investigating  the  matter  of  the 
Armour  Car  Lines  and  the  private  cars  in  Chicago,  another  witness 
refused  to  answer,  and  we  have  there  a  proceeding  pending  now  to 
comj^el  a  witness  to  ansAver  questions. 

All  these  cases  show  the  history  of  the  contest  from  the  very  begin- 
ning, soon  after  the  Inter.^tate  Commerce  Commission  was  organized 
and  Avhen  there  seemed  to  be  a  general  purpose  to  disregard  the  orders 
of  the  Commission  and  dispute  every  question  at  every  point. 

This  is  a  brief  history  of  that  matter.  In  addition  to  that,  as  you 
were  told  yesterday  by  Commissioner  Prouty,  the  Commission  inau- 
gurated many  general  investigations  to  ascertain  what  was  going 
on  in  regard  to  flour  rates  from  jNIinneapolis  to  the  East,  where  it 
was  in  the  air  that  there  were  rebates  in  tliat  business,  as  well  as  in 
the  grain  and  packing-house  products  at  Chicago,  Kansas  City,  and 
other  places.  Commissioner  Prouty  told  you  yesterday  the  results 
of  these  earlier  inquiries,  when  it  could  not  be  proved  by  any  witness 
that  rebates  were  being  o-iven. 

But  a  turn  came,  for  some  reason,  in  1902,  when  we  had  another 
general  inquiry  of  that  sort  in  regard  to  grain  and  packing-house 
products,  when  tliey  did  come  up,  one  by  one,  and  tell  that  they  were 
giving  rebates  and  had  been  doing  so  for  years.  Not  only  that,  but  let 
me  read  you  a  little  of  the  testimony. 

It  seems  such  an  easy  thing  for  a  gentleman  to  come  here  and  call 
us  amateurs.  It  seems  such  a  little  thing  that  the  Commission  could 
enforce  the  law  against  everybody  if  it  only  wanted  to.  If  the  gentle- 
man had  been  around  with  the  Comuiission  on  these  various  occasions 
and  had  heard  from  the  same  Avitnesses  that  there  were  no  rebates, 
and  afterwards  that  there  were,  and  had  seen  the  contest  that  they 
had  under  these  statutes  and  the  necessity  to  make  other  statutes  by 
Congress  in  order  to  meet  the  situation,  he  perhaps  would  not  have 
thought  that  the  Commission  had  been  sitting  idle  while  this  con- 
dition, which  he  so  much  deplores,  was  continuing. 

After  having  told  that  there  were  rebates  paid.  Mr.  Johnson,  of 
the  Eock  Island  road,  at  that  time  vice-president  of  it — a  road  rej^re- 


REGULATION    OF    RAILWAY   RATES.  61 

sented  here  a  feAv  days  ago  by  Mr.  ]SIather,  "who  said  that  all  this 
agitation  for  amendment  of  the  laws  was  mostly  on  account  of  misled 
sentiment.  Now,  Mr.  Day  was  employed  by  the  Commission  at  that 
time  to  conduct  this  inquiry  before  it,  and  he  was  asking  some  ques- 
tions of  Mr.  Johnson.  As  I  say,  Mr.  Johnson  at  that  time  was 
vice-president  of  the  Eock  Island  road,  as  I  remember.  A  fter  having 
testified  that  rebates  had  been  given — I  will  not  undertake  to  read  all 
of  this^-Mr.  Day  asked  and  Mr.  Johnson  answered  as  follows : 

Mr.  Day.  How  were  these  paymeuts  noted  in  your  accounts — were  they  as 
refunds  of  overcharges? 

Mr.  Johnson.  They  do  not  go  through  our  general  accounts. 

Mr.  Day.  How  are  they  carried — in  separate  accounts? 

Mr.  Johnson.  They  are  not  carried  very  long.  They  are  destroyed  soon 
afterwards. 

Commissioner  Prouty.  AA'hat  do  y©u  mean  by  saying  that  they  do  not  go  in 
the  general  account? 

JMr.  Johnson.  I  suppose  they  go  through  the  treasury.  I  mean  they  do  not 
go  through  the  freight  auditor's  account  in  the  ordinary  way  of  an  overcharge 
claim. 

The  Chairman.  There  must  be  an  entry  on  the  books  of  your  company  some- 
where corresponding  to  the  amount  drawn  out  for  this  purpose. 

Mr.  Johnson.  I  suppose  there  is  in  the  treasury  department. 

The  Chairman.  What  that  entry  is  you  do  not  know? 

Mr.  Johnson.  No;   I  do  not  know  anything  about  that. 

!j!  *****  * 

Commissioner  Clements.  Talce  one  of  these  transactions  and  tell  us  what 
evidence  there  is  now  in  your  boolvs  or  papers  of  the  transaction.  A  claim  is 
filed.  The  communication — this  statement  comes  from  the  house,  for  instance, 
in  an  envelope.     You  take  that  and  check  it  up.     Then  where  does  it  go? 

Mr.  Johnson.  I  think  it  is  destroyed. 

Commissioner  Clements.  And  upon  some  sort  of  memorandum  a  check  is 
drawn? 

Mr.  Johnson.  It  is  not  destroyed  until  checked  up  with  the  billing — the  file  in 
the  office — then  the  statement  is  made  from  the  claim  as  filed.  The  draft  is 
drawn,  and  tlien  the  j)apers  are  desti'oyed.  as  I  understand 

Commissioner  Clements.  Why  are  they  destroyed? 

Mr.  Johnson.  Simply  for  the  purpose  of  destroying  any  evidence  there  may  be. 

Commissioner  Clements.  Is  there  no  entry  on  a  book  that  so  much  money 
has  gone  into  your  treasury  and  some  of  it  conies  out? 

Mr.  Johnson.  That  is  a  matter  with  the  treasury  department.  I  do  not  know 
anything  about  that. 

Commissioner  Clements.  You  do  not  know  what  entries  are  made  about  it?  • 

Mr.  Johnson.  No  ;   I  do  not. 

Commissioner  Clements.  All  the  papers  you  know  about  or  entries  that  you 
are  familiar  with  are  destroyed? 

Mr.  Johnson.  I  understand  they  are  all  destroyed. 

Commissioner  Clements.  Have  you  not  any  recent  ones? 

Mr.  Johnson.  I  do  not  think  they  are  more  than  thirty  days  old. 

Commissioner  Clements.  You  think  that  all  up  to  within  thirty  days  are 
destroyed? 

Mr.  Johnson.  That  is  the  rule  or  custom. 

Commissioner  Clements.  Is  it  probable  you  have  some  that  are  not  yet  de- 
stroyed ? 

Mr.  Johnson.  It  may  be.     There  may  be  some  that  have  just  been  filed. 

Commissioner  Clements.  Well,  is  that  practice  still  going  on  of  paying  these 
claims? 

Mr.  Johnson.  The  old  ones. 

Commissioner  Clements.  You  are  paying  the  old  ones? 

Mr.  Johnson.  Yes,  sir;   nothing  has  been  filed  since  the  1st  of  January. 

Now,  there  is  the  testimony  of  that  witness,  and  I  need  not  read 
more.     There  is  plenty  more  of  it  in  there.     Mr,  McCabe,  of  the 


62  REGULATION^    OF   RAILWAY   EATES. 

Pennsylvania,  also  testified  that  these  rebates  were  paid  and  ad- 
justed, and  that  the  papers  were  probably  destroyed.  Mr.  Bird,  of 
the  Milwaukee  road,  also  testified  as  to  this  wholesale  practice  of  pay- 
ing these  rebates,  and  Mr.  Mitchell,  of  some  other  road  in  the  North- 
west— I  do  not  know  just  at  this  moment  what  it  was — testified  spe- 
cifically that  these  vouchers  and  papers  were  destroyed,  soon  after 
they  were  made,  that  the  entries  were  not  made  upon  the  books,  and 
there  were  settlements  from  time  to  time  on  a  piece  of  paper  or 
memorandum,  and  as  soon  as  that  served  its  purpose  it  was  de- 
stroyed— and  destroyed,  as  Mr.  McCabe  said,  because  they  were  afraid 
at  some  time  they  might  be  called  upon  to  lay  those  papers  before 
the  Commission.  Xow,  these  things  are  all  in  there,  and  I  would 
be  glad,  with  the  consent  of  the  committee,  not  to  have  to  read  any 
more  of  that,  but  to  insert  it  as  an  appendix  of  what  I  may  say. 

Senator  Dolliver.  That  may  be  done. 

Mr.  Clements.  Here  is  the  document.  It  all  refers  to  these  mat- 
ters. I  do  not  care  to  single  out  a  particular  witness  or  to  point  out 
what  he  has  testified  to. 

The  document  referred  to  is  printed  as  Appendix  G. 

Senator  CuLi.oar.  Do  vou  mean  to  sav  that  that  is  all  there  is  on 
the  subject  of  rebates  in  this  countrv? 

JNIr.  Clements.  No:  I  say  that  is  the  testimony  in  that  particular 
hearing — at  that  particular  time. 

Senator  CuLLO^r.   Just  one  hearing? 

Mr.  Cle:mexts.    As  to  rebates. 

Senator  Cullom.    I'hat  relates  to  rebates. 

The  CHAiR:\rAN.    \Aniat  year  did  that  occur? 

Mr.  Clements.    Januarj^  1902. 

The  Chatrjian.  Before  the  Elkins  bill  was  passed? 

Jilr.  Cle:ments.    Yes. 

Senator  Cullom.  There  is  testimony  there  on  both  sides  of  the 
question. 

Mr.  Clements.  Yes.  The  only  people  who  were  called  in  that 
case  were  the  railroad  officials.  The}^  were  the  only  ones  examined. 
It  is  their  oAvn  testimony  in  relation  to  what  they  themselves  did. 

The  Chairman.  I  thought  you  described  the  cases  as  occurring 
since  the  passage  of  the  law. 

Mr.  Clements.  I  will  come  to  that  directl3^  The  Commission  has 
been  arraigned  here  by  so  many  of  these  advocates  of  these  people  who 
have  been  indulging  in  these  practices  for  not  doing  anything — sitting 
idly  by — that  I  simply  want  to  show  in  some  form  what  we  have  been 
doing  and  what  our  difficulties  have  been,  and  how  it  has  attempted 
to  get  decisions  that  would  enable  us  to  do  anything,  and  how  it  has 
taken  time  to  get  an  amendment  to  the  law  that  we  might  proceed  in 
order  to  get  testimony  about  anything.  Of  what  value  would  be  the 
reports  of  the  findings  of  the  Commission  so  long  as  it  is  powerless 
to  get  the  testimony  to  develop  the  whole  case ;  of  what  use  would  be 
the  whole  business  of  ascertaining  the  facts  and  making  findings  and 
reporting  them  as  a  basis  for  suit  in  court  to  enforce  the  order  of  the 
Commission  unless  the  Commission,  in  some  way,  can  get  the  testi- 
mony? And,  as  I  have  pointed  out,  it  had  a  series  of  lawsuits  in 
order  to  get  on  a  basis  where  it  was  understood  we  could  get  it. 


REGULATION"    OF    RAILWAY   RATES.  63 

Now,  you  will  see  there  what  the  methods  were  of  concealing  these 
rebates  and  of  destroying  the  testimon}'^ — admitted  and  sworn  to  by 
the  gentlemen  under  whose  supervision  it  was  done.  Mr.  Tuttle  told 
you  a  few  days  ago  here,  as  I  remember  it — the  statement  is  in  the 
record — in  one  instance,  on  one  page,  that  rebates  can  not  be  con- 
cealed ;  that  there  must  always  be  some  evidence  left  which  an  active 
commission  or  an  investigating  authority  could  find  out.  On  the 
next  page  he  says,  in  substance,  that  if  a  road  was  going  willingly  and 
deliberately  into  the  rebate  business  they  certainly  would  not  leave 
any  evidence  of  it.  I  have  this  quotation  here,  and  I  could  read  it  to 
you,  but  you  have  heard  the  statement  and  it  is  in  the  record,  I  will 
not  take  the  time  to  quote  what  he  said  literally.  Then  that  was  fol- 
lowed up  by  Mr.  Morawetz,  who  said  about  the  same  thing.  First,  it 
is  an  easy  matter  to  detect  these  things.  Surely  the  Commission 
could  do  it  if  it  would.  That  is  the  substance  of  it.  On  the  next 
page  we  find  that  if  it  is  undertaken  to  be  done  those  who  do  it, 
of  course,  will  conceal  it.  Then  it  was  suggested  by  the  chairman  of 
the  committee  or  somebody  else  that  there  were  various  ways  of 
doing  it. 

Sometimes  it  might  be  a  present,  that  had  nothing  to  do  with  it  and 
would  not  appear  on  the  books — a  present  to  his  wife  or  some  member 
•of  his  family — and  then  it  was  agreed  all  around  by  these  gentlemen 
who  said  the  Commission  could  do  it  and  ought  to  do  it  and  was  to 
blame  because  it  had  not  been  done,  that  nobody  would  be  fool  enough 
who  was  going  to  pay  rebates  to  leave  the  evidence  lying  around  by 
which  that  fact  could  be  detected.  That  is  the  substance  of  the  argu- 
ment. Now,  these  things  are  not  consistent;  but  what  is- the  matter 
in  issue?  Wliat  is  the  question  before  the  country  at  this  time?  If 
you  were  to  listen  to  the  gentleman  who  was  last  before  the  commit- 
tee and  to  manj^  others,  j^ou  would  suppose  that  the  Commission  had 
recommended  and  that  the  President  had  recommended  and  that  there 
was  a  bill  pending  now  here  that  should  authorize  the  Commission 
to  lay  its  hands  upon  every  rate  in  the  country  to-morrow  and  to  fix 
it  and  regulate  it  arbitrarily.  We  hear  that  expression  continually — 
arbitrarily  fix  all  rates. 

The  Commission  has  never  intimated  that  it  was  in  favor  of  any 
such  procedure  as  that;  no  such  thing  has  been  contemj)lated  by  any- 
body that  I  know  of  in  connection  with  this  subject ;  no  such  proposi- 
tion is  involved  in  the  matter;  but  thev  sav  it  will  lead  to  that,  that 
rate  by  rate  you  correct  one  to-morrow  and  another  one  the  next  day. 
and  after  a  while  another  one,  and  the  next  day  a  good  many,  and 
finally  you  will  have  laid  your  hands  on  all  of  them.  Well,"  about 
the  best  answer  to  that  is  tliat  for  the  ten  years  the  Commission  was 
undertaking  to  exercise  this,  no  such  result  as  that  came  about.  There 
was  no  such  avalanche  as  we  have  heard  would  come  upon  the  Com- 
mission next  week,  if  it  had  these  powers.  There  was  no  such  revo- 
lution as  that.  AVliy,  we  hear  continually,  every  day  this  is  talked 
about,  that  it  would  bring  chaos,  ruin,  bankruptcy.  Did  it  bring 
it?  A^Tiy,  Mr.  Hines  said, -in  his  argument  a  few  days  ago,  that  if 
this  power  was  given  there  would  be  a  perfect  avalanche  of  complaints 
on  the  Commission ;  it  would  be  overwhelming ;  and  no  matter  how 
many  there  were,  or  how  efficient  it  might  be,  that  it  could  not  move 


64  REGULATION    OF   RAILWAY   RATES. 

with  the  business.  That  was  not  so  then.  I  am  not  undertaking 
to  quote  literall}'  his  words,  but  that  is  the  meaning  of  it. 

Senator  Cakmack.  You  mean  it  was  not  so  while  the  Commission 
was  actually  exercising  that  power  ? 

Mr.  Clemexts.  Yes;  the  ten  years  it  did;  and  yet  we  are  told 
in  the  next  breath  that  everything  is  pacific,  everything  is  quiet, 
every  part  of  the  country  is  at  repose ;  that  there  is  no  objection  to 
the  rates;  that  there  are  no  rebates,  no  unreasonable  rates,  nothing 
to  clamor  about :  that  there  is  nobody  clamoring  but  the  Interstate 
Commerce  Commission,  and  that  that  is  due  to  an  inordinate  lust 
for  i30wer  and  authority  to  lay  its  hands  upon  this  property.  Does 
that  seem  a  reasonable  proposition,  if  everything  is  serene  and  there 
is  nobody  to  complain  and  nothing  to  complain  about?  Wh}^  would 
there  be  an  avalanche  heaped  upon  the  Commission  until  it  would  be 
covered  up  and  could  not  move  ?  It  was  not  so  before.  That  brings 
me  to  the  justification  for  the  contention  of  the  Commission  before  in 
its  efforts  to  enforce  this  law.  It  Avas  said  a  few  days  ago,  I  think 
again  by  Mr.  Hines,  that  for  several  years  after  the  maximum  rate 
decision  in  1807  it  was  contended  that  all  that  was  sought  by  this 
new  legislation  was  to  give  the  Commission  the  power  that  Con- 
gress intended  to  confer  upon  it  originally,  and  he  also  said  that 
as  great  a  man  and  as  conspicuous  a  person  as  the  Speaker  of  the 
House,  Mr.  Cannon,  had  recently  voiced  that  idea  in  a  caucus  at 
the  other  end  of  this  Capitol.  That  was  so  conceded,  and  I  have  no 
doubt  that  he  did. 

These  gentlemen  over  here — these  newspaper  gentlemen — always 
get  what  was  done  in  the  caucus.  If  they  do  not  get  anything  else 
right,  thej^  get  that,  and  I  have  no  doubt  that  Mr.  Cannon  said  that, 
and  I  have  no  doubt  that  he  believed  it.  Now,  let  me  introduce  a 
witness  whose  name  is  familiar  to  all  of  you  and  whose  name  is 
synonymous  with  truth  and  courage,  a  man  who  could  say  "  no  "  to 
a  friend  and  "  yes  "  to  an  enemy  as  readily  as  any  man  who  ever 
lived.  I  refer  to  William  R.  Morrison.  In  the  first  annual  report 
of  the  Commission,  after  the  first  maximum-rate  decision,  in  which 
the  Supreme  Court  held  that  the  Commission  could  not  do  that: 
that  it  amounted  to  fixing  a  future  rate ;  that  it  had  no  such  au- 
thority under  the  act,  Mr.  Morrison  at  that  time  beino;  chairman  of 
the  Commission  and  one  of  the  original  panel,  so  to  speak,  appointed 
when  the  Commission  was  organized,  penned  the  following  words. 
Now,  perhaps  he  knew  as  much  about  the  views  of  his  associates  from 
the  organization  of  the  Commission  as  anybody  else  did,  and  no 
amount  of  interest  on  either  side  of  this  case  would  have  induced 
him  to  shade  it  one  iota.     Here  is-what  he  said: 

The  Commission  exercised  its  power  in  a  ease  commenced  in  tlie  second 
montli  after  its  organization  and  continued  to  exercise  it  for  a  period  of  more 
than  ten  years,  diu'ing  which  time  no  member  of  the  Commission  ever  offi- 
cially questioned  the  existence  of  such  authority  or  failed  to  join  in  its  exer- 
cise. As  already  stated,  the  authority  of  the  Commission  to  modify  and  reduce 
an  established  rate  and  to  enforce  a  reasonable  rate  for  the  future  was  not 
questioned  in  the  answer  of  the  defendant  in  the  Atlantic  rate  case,  decided 
March  30, 1896,  nor  had  it  ever  been  denied  in  any  answers  made  to  more  than  400 
previously  commenced,  many  of  them  alleging  unreasonable  and  unjust  charges 
and  praying  the  Commission  to  enforce  a  reduction  and  lower  the  rates  in  the 
future.     The  circuit  court  of  appeals  in  the  sixth  circuit  either  understood  the 


EEGULATION    OF    KAILWAY    RATES.  65 

decision  as  tbe  Commission  understood  it  or  was  in  doubt  as  to  its  meaning, 
for  that  court  certified  a  later  case  involving  the  question  to  the  Supreme 
Court  to  determine  what  powers  Congress  had  given  this  Commission  in  re- 
spect of  the  matter  of  rates.  It  also  appears  that  in  part  the  Supreme  Court 
itself  had  the  same  understanding  or  misunderstanding  as  did  the  Commission, 
for  in  a  later  decision  made  in  the  case  certified  one  member  dissented  from 
the  determination  of  the  judgment  of  the  court. 

In  the  proceedings  of  Monday,  April  24,  1905,  on  page  20,  occurs 
this  statement,  made  by  Mr.  Hines : 

In  1891  the  Lehigh  Valley  Railroad  was  made  the  defendant  in  a  suit  by  the 
Commission  to  enforce  a  rate-making  order,  and  set  up  in  court  the  defense  that 
the  Commission  had  no  power  to  nialce  rates. 

Mark  j'oii,  gentlemen,  that  is  said  to  have  occurred  in  1891.  This 
is  said  in  connection  with  the  argument  that  early  the  railroads  began 
to  dispute  this  poAver  of  the  Commission,  so  that  in  a  case  begun  in 
1891  against  the  Lehigh  Valley  road  to  enforce  an  order  of  that  kind 
made  by  the  Commission  the  defendant  disputed  it.  Now,  what  are 
the  facts  about  that?  There  is  Colonel  Morrison's  statement  that  in 
no  answer  made  by  any  carrier — although  the  Commission  com- 
menced in  the  second  month  and  made  an  order  of  this  kind  in  a  case 
begun  in  the  second  month  of  its  existence — that  for  ten  years  no 
carrier  put  into  its  ansAver  any  denial  of  this  authority.  Yet  we  find 
here  that  it  is  said  that  in  a  case  commenced  by  the  Commission 
against  the  Lehigh  Vallej^  Kailroad  in  1891  that  point  was  made. 
Now,  the  fact  about  that  is  that  in  the  answer  to  the  Commission 
there  was  no  such  question  raised  by  the  carrier;  in  the  answer  filed 
in  the  lower  court  there  was  no  such  question  made,  for  it  went  to  the 
circuit  court  first,  and  in  1897,  ten  years  after  the  Commission  was 
organized,  that  case  was  still  pending  in  the  circuit  court  of  appeals 
in  Pennsylvania,  and  the  court  had  decided  the  Social  Circle  Case 
and  had  it  pending  probably  before  it.  I  am  not  sure  as  to  that,  but 
it  was  just  before  the  Maximum  Rate  Case  was  decided,  and  the 
probability  is  that  that  case  was  pending  in  the  circuit  court.  Then 
in  the  argument  of  that  case  in  the  circuit  court  of  appeals  in  1896  or 
1897 — 1897,  I  believe  it  was — Mr.  Johnson,  representing  the  Lehigh 
Valley  Railroad,  did  make  an  argument  to  the  effect  that  the  Commis- 
sion had  no  such  authority.  In  the  argument  in  the  circuit  court  he 
had  said  as  follows  in  his  brief: 

If  the  Interstate  Commerce  Commission  is  clothed  with  the  power  to  make 
reductions  in  rates  which  are  uniform  and  nondiscriminative,  such  power  is 
one  which  ought  to  be  exercised  with  exceeding  care.  etc. 

There  was  a  frank  admission  that  the  power  existed,  but  a  caution 
that  it  should  be  exercised  with  care.  That  was  in  the  circuit  court 
in  this  case,  which  it  is  true  was  commenced  in  1891,  but  no  such  plea 
or  answer  as  that  was  put  in  in  1891;  but  later  when  it  was  argued 
before  the  court  there  was  that  practical  admission  that  the  poAver 
existed,  with  a  caution  that  it  should  be  exercised  with  care.  Two 
or  three  years  later,  just  before  the  decision  in  the  Maximum  Rate 
Case,  when  that  case  was  still  pending  in  the  court  of  appeals  in 
Pennsylvania,  he  put  into  his  brief  the  contention  that  the  Commission 
had  not  the  power.  But  now  let  us  see  what  he  said  when  the  case 
was  on  trial  before  the  Commission.     This  is  Mr.  Johnson,  who  was 

74lA— 0.5 5 


66  REGULATION    OF    RAILWAY    RATES. 

the  lawyer  then  for  the  Lehigh  Valley  Railroad,  and  is  now  one  of 
the  distinguished  corps  of  lawyers  on  behalf  of  the  Pennsylvania 
Railroad. 

The  Chairman.  Mr.  John  G.  Johnson,  of  Philadelphia? 

Mr.  Clements.  Yes.  Now,  when  this  case  was  being  tried  before 
the  Commission,  before  it  got  into  court 

Senator  Dolliver.  AVlien  was  that — in  1891  ? 

Mr.  CLEME^'TS.  The  complaint  was  filed  October  19,  1888.  The 
answer  was  filed  November,  1888.  The  hearing  of  arguments  was 
had  on  March  19  and  20,  1889.  That  is  when  the  case  was  heard 
finally  before  the  Commission.  The  briefs  and  printed  arguments 
were  filed  April  4,  1S89,  and  the  case  was  decided  March  12,  1891. 
This  case  was  prepared  by  Colonel  Morrison.  It  vv'as  the  decision  of 
the  Commission,  but  in  the  assignment  of  cases  it  went  to  him  also. 
Here  is  what  occurred  on  the  trial  before  the  Commission.  Colonel 
Morrison,  reciting  the  history  of  the  case  and  the  finding  of  facts, 
and  so  forth,  savs  this : 

After  submitting  the  proposed  findings  of  facts  for  the  consideration  of  the 
Coniniission,  counsel  for  the  complainants,  in  his  concluding  argument,  said : 

"As  to  the  xnireasonahleness  of  the  charge,  we  ask  the  Commission  to  find 
that  the  rate  of  iRl.SO  is  unreasonable  within  the  statute.  We  do  not  ask  or 
care  about  ^-our  honors'  establishing  any  particular  rate.  There  are  a  great 
many  ways  in  which  these  coal  rates  can  be  determined  without  fixing  any 
arbitrary  or  inflexible  standard.  It  could  be  a  sliding  scale,  depending  upon 
the  price  of  coal.  You  could  determine,  first,  the  cost  of  mining  the  coal,  and 
then  the  cost  of  railroad  transportation.  Another  way  to  establish  a  rate  would 
be  at  some  fixed  proportion  of  the  average  of  the  selling  price  of  the  coal  at 
tide  water.  If  they,  the  carriers,  are  informed  that  their  present  rate  is  unrea- 
sonable, they  will  then  meet  the  individual  operators  out  of  their  district  in 
consultation,  and  I  am  sure  some  amicable  arrangement  will  be  reached  by 
which  both  parties  can  make  money." 

Now,  that  was  the  suggestion  of  Mr.  Gowan,  also  a  lawyer  of 
distinction,  who  represented  the  complainants  in  that  case. 

The  Chairiman.  Was  he  the  president  of  the  railroad? 

Mr.  Clements.  No;  this  is  Mr.  Franklin  B.  Gowan,  He  is  not 
living  now,  I  think.  He  was  the  lawyer  for  the  complainants  in  this 
case,  and  that  is  what  he  said — find  that  this  rate  is  unreasonable  and 
leave  it  there,  and  we  will  find  some  way  for  the  railroad  to  adjust 
it  on  some  basis  that  will  help  us.  That  is  a  good  deal  like  that  which 
has  been  suggested  here  in  the  hearings  a  good  many  times,  to  just  let 
the  Commission  find  that  it  is  unreasonable  and  after  that  is  litigated 
and  the  court  decides  that  it  is  unreasonable,  then  everything  wrong 
will  disappear,  and  you  will  get  a  reasonable  rate  without  doing 
anything  more.     That  is  the  idea  of  these  complainants  also. 

The  Chairman.  Don't  you  think  that  the  railroads  would  try  to 
make  a  reasonable  rate  after  that? 

Mr.  Cle3Ients.  I  should  think  they  would  in  many  instances.  I 
do  not  repudiate  that  suggestion.  I  have  no  doubt  that  there  Avould 
be  such  an  adjustment  made  as  would  endeavor  to  avoid  another 
controvers3\  but  it  might  not  always  meet  the  full  needs  of  justice. 

The  CiiAiR3iAN.  That  would  leave  the  rate-making  power  still 
with  the  railroads  and  avoid  all  disputes. 

Mr.  Clements.  Yes.  That  is  what  the  complainant's  counsel  asked 
in  this  case.  Now,  what  did  Mr.  Johnson  say,  who  represented  the 
railroad  ? 


REGULATION    OF    RAILWAY    RATES.  67 

Complainant's  counsel  here  expressed  the  belief  that  the  coal  traffic  afforded 
a  fair  profit  to  both  the  producer  and  the  carrier ;  that  to  secure  an  equitable 
division  of  profits  it  was  only  necessary  to  declare  the  charge  made  to  be  unrea- 
sonable, and  the  parties  would  come  together  and  fix  the  proper  rates  themselves. 

The  last  I  quoted  there  was  from  Mr.  Morrison,  repeating  what 
Mr,  Gowan  said.  I  now  come  to  what  Mr.  Johnson  said.  He  was 
the  counsel  for  the  road.     Mr.  Johnson  said,  in  reply: 

That  will  not  do.  If  this  Commission  says  that  the  present  rates  are  unrea- 
sonable, they  must  say  so  because  there  is  a  different  rate  that  they  have  deter- 
mined to  be  a  proper  one.  It  will  not  do  for  you  to  make  a  general  finding  and 
say  that  the  present  rates  were  unreasonable,  but  we  do  not  know  what  they 
ought  to  be.  We  can  not  fix  them  for  you.  You  must  agree  upon  them  among 
yourselves.  If  unreasonable,  say  to  what  extent  they  are  unreasonable,  whether 
to  the  extent  of  one  cent,  or  of  many  cents,  or  a  dollar  a  ton.  Would  it  be 
proper  for  you  to  lay  down  an  alistract  principle  that  would  lead  to  endless 
confusion  in  the  application?     That  would  put  all  at  chaos. 

The  committee  has  heard  a  good  deal  of  chaos  during  the  last  few 
days. 

For  heaven's  sake,  do  not  ever  make  the  matter  of  a  proper  rate  foi-  carrying 
coal  one  to  be  regulated  in  a  confere]ice  between  the  carrier  and  the  shippers. 
If  you  have  been  convinced  by  the  petitioners  that  the  present  rates  are  unrea- 
sonable and  unjust,  then  say  what  the  rates  ought  to  be.  This  will  be  your 
duty.  I  do  not  wonder  that  JNIr.  Gowan  shrinks,  etc.,  from  the  contest  of  the 
•case. 

Then  he  went  on  to  argue  that  Mr.  Gowan  had  not  made  out  any 
case  which  would  justify  that  kind  of  a  specific  finding.  But  there 
he  says,  for  heaven's  sake  don't  ever  lea^'e  it  for  a  scramble  between 
the  railroad  and  the  shippers,  with  endless  chaos,  but  to  be  definite 
about  it,  and  if  you  know  that  this  rate  is  an  unreasonable  one,  you 
must  know  that  something  else  is  reasonable,  because  they  are 
directly  related  and  you  can  not  say  that  one  rate  is  reasonable  un- 
less you  have  a  standard  by  which  to  judge  it. 

The  Chairmax.  Before  that  he  had  denied  the  power  of  the  Com- 
mission ? 

Mr.  Clements.  No;  he  denied  that  several  jenrs  later.  He 
denied  that  in  the  court  of  appeals. 

The  Chairman.  On  what  case? 

Mr.  Clements.  This  same  case. 

The  Chairman.  And  when  he  argued  this  case  when  it  was  taken 
up 

Mr.  CLEifENTS.  In  this  case  the  Commission  made  the  order  and 
undertook  to  do  Avhat  he  asked  it  to  do  and  find  what  was  a  reason- 
able rate.  The  Commission  was  not  trying  then  to  make  rates,  but 
the  Commission  found  that  the  rate  existing  was  unreasonable,  and 
imdertook  to  find  out  to  what  extent  it  was  unreasonable,  and  in  its 
order  to  the  carrier  to  cease  and  desist  from  the  ascertained  viola- 
tion of  the  law  it  ordered  it  to  cease  and  desist  charging  any  part  of 
that  unreasonable  excess,  or  more  than  so  much,  which  was  found  to 
he  reasonable.     That  was  what  it  undertook  to  do. 

The  Chairman.  Then  on  the  appeal  Mr.  Johnson  changed  his 
position  ? 

Mr.  Clements.  That  was  before  the  Commission  Mr.  Johnson  said 
that.  Then  the  order  was  disobeyed,  and  the  Commission  brought 
suit  in  the  circuit  court,  and  in  the  argument  of  that  case  Mr.  John- 


68  REGULATION    OF    RAILWAY   RATES. 

son  used  the  language  which  I  first  read  here,  that  if  the  Commission 
has  such  authority  it  ought  to  be  exercised  with  great  care.  Then 
when  the  case  was  appealed  to  the  court  of  appeals  several  years  later 
he  put  in  his  final  proof  there  a  dispute  of  this  power. 

The  Chairman.  He  got  to  that  little  by  little. 

Mr.  Cle]ments.  He  got  to  it  little  by  little.  He  was  helped  to 
it,  perhaps,  by  the  decision  of  the  Supreme  Court  in  the  Social 
Circle  Case. 

The  Chairman.  I  think  so. 

Mr.  Clements.  Then  he  was  also  helped  to  it,  a  little,  doubtless,  by 
the  fact  that  the  court  of  appeals  at  Cincinnati  was  not  a  unit,  or  at 
least  had  seen  proper  to  certify  the  decision  to  the  Supreme  Court. 
Judge  Taft  was  a  member  of  that  court  of  appeals.  Judge  Harlan 
delivered  the  dissenting  opinion  in  the  case  when  the  case  was  ap- 
pealed. It  was  Secretary  Taft,  who  was  a  member  of  that  court 
when  it  certified  the  question  up  here,  all  of  which  tends  to  show  that 
the  Commission  at  least  had  some  color  of  contention  that  it  had 
something  to  do  with  doing  away  with  an  unreasonable  rate,  and  it 
had  some  good  company  in  its  contention. 

Senator  Cullom.  And  determining  what  a  new  rate  should  be  ? 

Mr.  Clements.  Yes;  and  that  was  brought  about  in  this  way: 
The  language  of  the  interstate-commerce  act,  as  originally  passed, 
was  that  when  the  Commission  ascertained  in  a  case  that  there  is 
any  violation  of  the  interstate-commerce  law  it  shall  order  the  car- 
riers to  cease  and  desist  from  that  ascertained  violation.  Now,  sup- 
pose a  rate  is  a  dollar  and  complaint  is  made  that  it  is  unreasonable 
and  the  Commission  investigates  it.  The  Commission  takes  the  testi- 
mony and  hears  all  that  can  be  said  in  testimony  and  argument,  and 
concludes  that  the  complaint  is  well  founded — that  a  dollar  is  unrea- 
sonable— and,  as  Mr.  Johnson  said  here,  it  must  have  some  idea  as  to 
what  is  a  reasonable  rate — at  least,  as  to  what  it  thinks  is  reasonable — 
otherwise  it  could  not  find  what  is  unreasonable.  The  testimony  that 
shows  the  one  indicates  the  other.  I  do  not  mean  with  absolute  pre- 
cision, but  it  fixes  a  basis  upon  which  the  mind  of  the  traffic  manager 
or  the  commission  or  whoever  it  is — the  jury — dealing  with  the  mat- 
ter, thinks  he  or  they  have  found  what  is  reasonable  Avhen  they  have 
found  what  is  unreasonable. 

Senator  Kean.  In  1890  the  Commissioners,  in  their  annual  report, 
I  think,  you  will  find  said  as  follows : 

In  some  eases  the  carriers  decided  against  have,  for  a  considerable  period, 
manifested  a  purpose  not  to  obey  an  order  of  the  Commission  reducing  rates, 
claiming  to  have  the  advice  of  counsel  that  the  action  of  the  Commission  was 
not  conclusive,  and  that  they  might  safely  await  the  determination  of  the  courts 
in.  the  premises.  If  they  have  finally  acquiesced  in  the  reduction,  they  have  in 
some  cases  taken  pains  to  have  it  understood  tliat  in  doing  so  they  were  acting 
from  motives  of  policy  rather  than  because  of  any  legal  obligation  which 
required  it. 

Mr.  Clements.  Well,  I  have  no  doubt  of  that.  I  will  come  to  that 
in  a  moment.  There  is  quite  a  difference  in  the  question  discussed. 
What  did  the  Commission  'do  in  that  case,  having  found  that  the  rate 
was  unreasonable  on  the  basis  of  what  is  thought  was  satisfactory 
testimony  as  to  what  was  reasonable?  It  proceeds  to  order  the  car- 
rier to  cease  and  desist  from  it.     Well,  suppose  it  had  found  90  cents 


REGULATION    OF    RAILWAY   RATES.  69 

was  a  reasonable  rate;  that  a  dollar  was  unreasonable.  If  the  car- 
rier refused,  but  put  anj^thing  above  90  cents,  was  it  not  just  as  much 
in  contravention  of  the  act  to  regulate  commerce  as  it  was  to  put  in 
the  dollar  rate?  The  law  says  that  all  rates  shall  be  reasonable  and 
just,  and  any  rate  that  is  not  reasonable  and  just  is  an  unlawful  rate. 
That  is  in  the  first  section,  Xow,  if  a  dollar  was  found  on  the  facts 
and  demonstrated  to  be  unreasonable  and  90  cents  was  the  best  that 
could  be  found  for  a  reasonable  rate,  and  if  that  was  a  true  finding 
and  was  justified  by  the  facts,  then  any  cent  above  90  cents  was  in 
violation  of  the  first  section  of  the  act  to  regulate  commerce,  whether 
it  was  91  cents  or  95  cents  or  $1.  Each  and  every  part  that  makes  up 
the  excessive  rate  above  what  is  reasonable  was  a  violation  of  the  act 
to  regulate  commerce,  according  to  the  terms  of  the  first  section,  and 
it  was  upon  that  theory  that  the  Commission  thought  to  make  an 
order  to  correct  the  entire  violation  and  not  simply  a  part  of  it.  But 
that  has  all  gone  by.  I  am  discussing  this  in  defense  of  the  course  of 
the  Commission  in  the  matter  and  as  bearing  upon  dealing  with  this 
question  now. 

Now,  Senator  Kean  has  shown  jne  what  the  Commission  said  in 
its  report  in  the  year  1890.  and  I  have  no  doubt  it  is  correct.  That 
does  not  contradict  what  Colonel  Morrison  said  or  anything  else  that 
has  been  said  here.  The  Commission  said  that  it  was  true  that  in 
1890  they  were  manifesting  a  disposition  in  many  cases  to  disregard 
these  orders,  but  why?  Because,  as  I  stated  there,  they  were  ad- 
vised by  their  lawyers  that  the  finding  and  conclusion  of  the  Com- 
mission was  not  conclusive,  that  they  could  well  wait  until  the 
court  had  passed  upon  it.  Well,  that  was  not  disputed,  that  the 
Commission  had  the  power  when  it  found  a  rate  to  be  unreasonable 
to  say  to  what  extent  it  was  unreasonable  and  condemn  that  entire 
extent  of  unreasonableness,  but  it  was  simply  saj'ing  that  you  have 
got  another  day  in  court,  where  you  can  be  heard  on  the  facts,  and 
where  the  order  of  the  Commission  is  onh'^  prima  facie.  Its  findings 
are  only  prima  facie.  It  is  only  the  basis  of  a  lawsuit,  and  you  can 
not  issue  process  upon  it.  It  is  not  conclusive,  of  course.  We  all 
know  that  there  never  was  any  contention  that  it  was  conclusive.  It 
was  only  prima  facie ;  it  was  only  a  basis  for  a  suit  if  the  carrier 
did  not  obey  the  order,  and  there  is  nothing  inconsistent  with  that. 
They  were  standing  back  and  saying,  I  will  obey  this  when  the 
court  orders  me  to  do  it — not  that  the  Commission  did  not  have 
jurisdiction  to  say  to  what  extent  the  rates  found  unreasonable  were 
unreasonable,  but  they  said,  "'  We  have  a  day  in  court,  and  we  will  try 
the  facts  and  we  will  obey  the  order  when  the  court  says  so."  That 
Avas  their  right  and  privilege  under  the  law  to  do  that.  The  Com- 
mission was  not  complaining  about  their  exercising  their  rights 
under  the  law,  but  the  Commission  was  calling  attention,  as  it  felt 
it  its  duty  to  do,  of  the  Congress  of  the  United  States  to  the  fact 
that  they  could  do  this  and  their  own  action  was  delayed  until  a 
lawsuit,  one  of  which  we  have  just  been  reading  about,  was  com- 
menced in  1891  and  ended  in  1897.     That  was  the  Coxe  Case. 

Senator  Kean.  There  is  an  extract  from  the  Commissioners'  report 
for  1895. 

Mr.  Clements.  Thank  you.  Now,  let  me  go  back  to  that  Coxe  Case 
and  say  this :  When  the  Maximum  Rate  Case  was  decided  the  Com- 


70  REGULATION    OF    RAILWAY    RATES. 

mission  dismissed  that  proceeding,  of  course,  because  upon  the  prin- 
ciple of  that  case  the  Coxe  Case  fell  to  the  ground ;  but  it  was  begun 
m  1891  and  it  was  dismissed — not  tried  in  the  court  of  appeals — in 
1897.  The  Senator  from  New  Jerse}'  calls  my  attention  to  this  quota- 
tion said  to  be  from  the  Commission's  report  in  1895  : 

The  complaints  investigated  by  the  Commission  relate  for  the  most  part  to 
the  measure  of  compensation  which  the  shipper  shall  pay  and  the  carrier  ac- 
cept. Yet  nowhere  in  the  act  is  the  Commission  specifically  empowered  to  de- 
cide in  any  case  what  this  compensation  should  be,  and  its  authority  to  do  so 
exists  mainly  by  implication.  It  seems  a  common-sense  proposition  that  the 
power  to  condemn  a  given  rate  as  unreasonable  involves  the  power  to  adjudge 
and  declare  what  rate  is  reasonable,  and  the  Commission  has  invaribly  acted 
on  the  assumption.  Nevertheless,  the  correctness  of  this  position  has  been 
openly  denied,  and  it  may  be  too  much  to  claim  that  the  dissenting  view  is 
wholly  unsupported  by  argument. 

"Well,  I  can  tell  you  the  history  of  that  exactly. 

Senator  Kean.  That  was  in  1895  ? 

Mr.  Cleinients.  Yes,  and  that  as  I  remember  it,  was  soon  after  the 
Social  Circle  Case  was  decided,  in  which  the  Supreme  Court  used  the 
same  language  which  tended  to  the  outcome  which  has  since  been 
realized  in  the  Maximum  Rate  Case.  Although  it  was  not  clear,  it 
pointed  to  that,  and  was  cited  by  Colonel  Morrison  in  that  report, 
notwithstanding  the  cue  that  was  given,  if  I  may  use  that  term  in 
the  Social  Circle  Case  indicating  the  trend  that  way. 

The  Chairman.  Was  not  the  Social  Circle  Case  decided  in  1896, 
and  this  report  was  in  1895? 

Mr.  Clements.  Well,  I  said  I  thought  not.  I  will  not  be  sure 
about  that,  but  I  do  know  that  this  question  was  then  beginning  to  be 
mooted  and  discussed  and  talked  about,  and  while  there  was  a  contest 
as  to  the  meaning  of  the  Social  Circle  Case,  it  turned  out  afterwards 
that  in  the  Maximum  Eate  Case  the  judges  were  divided  as  to  what 
it  did  mean,  whether  it  went  to  the  full  extent  they  finally  went  or 
not.     It  was  a  controverted  question. 

Senator  Xeavlands.  How  did  the  court  stand  in  the  Maximum 
Rate  Case  on  that  question  ? 

Mr.  Clements.  I  think  they  all  decided  one  way.  except  Justice 
Harlan. 

The  Chairman.  The  Social  Circle  Case  was  decided  March  30, 
189C.     That  is  the  precise  date. 

jSIr.  Cle^ients.  It  perhaps  had  been  argued  and  the  matter  was 
being  contested.  It  was  brewing,  and  the  matter  was  on  hand,  and 
the  Commission  was  advised  then  they  were  beginning  to  make  this 
contest;  but  still  I  put  the  testimony"^ of  the  chairman  of  this  Com- 
mission when  the  Maximum  Eate  Case  was  decided — Mr.  Morrison, 
who  was  one  of  the  original  panel — and  I  put  in  the  testimony  here  of 
what  he  said  about  it,  and  although  there  may  have  been  talk  among 
lawyers  and  discussion  about  it,  they  put  no  such  question  as  that  in 
their  answers ;  and  Mr.  Johnson,  who  did  finally  put  it  in  there  after 
the  indications  were  that  that  was  going  to  be  attacked — ^you  have 
heard  his  language  when  he  held  up  his  hands  and  said,  "  For 
heaven's  sake,  do  not  do  such  a  thing  as  that,  and  leave  us  all  at  sea !  " 

The  Chairman.  Lawyers  often  change  their  opinion. 

Mr.  Clejments.  Yes ;  there  is  no  doubt  about  that,  and  so  do  other 


REGULATION    OF    RAILWAY   RATES.  71 

people.  Now,  however  all  that  may  be,  as  to  whether  the  Commis- 
sion Avas  ever  justified  in  its  contention  or  not,  that  has  been  settled. 
It  has  been  settled  now  ever  since  1897  that  the  Commission  has  no 
authoritj'  to  fix  a  rate  for  the  future.  As  I  said  a  moment  ago,  it 
never  affirmatively  undertook  to  do  that  in  any  case.  All  it  under- 
took to  do  Avas,  when  it  found  a  rate  unreasonable,  to  declare  that  it 
Avas  unreasonable  and  order  the  A-iolation  to  the  full  extent  of  the  un- 
reasonableness to  cease.  That,  of  course,  in  effect  did  operate  to 
designate  a  maximum  rate,  which  could  not  be  exceeded  for  the  future 
if  the  order  was  obeyed,  but  it  did  not  fix  the  rate.  They  could  have 
charged  a  less  rate,  and  it  Avas  not  an  aflirmatiA^e  effort  to  name  a  rate, 
but  it  was  an  effort  to  say  to  Avhat  extent  the  rate  in  question  and  con- 
demned was  unreasonable  and  therefore  unhiAvful. 

I  have  not  the  language  before  me  just  at  this  time,  but  I  have  a 
memorandum  of  it  that  Avas  used  by  Mr.  Bond,  the  attorney  for  the 
Baltimore  and  Ohio,  in  which  he  said  that  the  Commission  ncA^er  did 
undertake  affirmatiA'ely  to  fix  a  rate  for  the  future,  and  substantially 
said  that  Avhat  the  Commission  undertook  to  do  is  what  I  have  just 
said,  without  using  his  exact  language.  That  is  the  history  of  all 
this  business.  It  was  simply  an  effort  to  ascertain  hoAV  much  of  the 
unreasonable  rate  Avas  unreasonable  and  condemn  that  and  leaA^e  the 
balance.  Mr.  Bond  also  goes  to  the  extent  of  saying,  in  speaking  of 
the  Esch-Townsend  bill,  so  called,  that  they — and  Avhen  asked  whom 
he  meant  hj  "  they,"  he  ansAvered,  "  the  Interstate  Commerce  Commis- 
sion " — in  Avriting  that  bill  they  thought  they  Avere  giving  themselves 
a  discretion  in  regard  to  the  fixing  of  a  rate  which  he  contended  they 
had  failed  in  the  language  of  that  bill  to  do.  All  I  care  to  refer  to 
in  that  connection  is  to  say  that  Avhen  Mr.  Bond  said  that  they — the 
Interstate  Commerce  Commission — in  Avriting  tlie  Esch-Townsend 
bill  undertook  to  do  certain  things,  to  give  themselves  certain  discre- 
tion in  making  a  rate,  that  he  simph^  absorbed  what  was  in  the 
atmosphere  among  his  associate  advocates  here— that  the  Interstate 
Commerce  Commission  was  at  the  bottom  of  that,  as  it  is  apparently 
believed  to  be  at  the  bottom  of  everything  else.  No  member  of  the 
Interstate  Commerce  Commission  ever  Avrote  a  line  of  the  Esch- 
Townsend  bill  or  asked  to  make  a  suggestion  about  it  or  had  anything 
whatever  to  do  Avith  it,  and  that  statement  is  absolute  and  Avill  no  doubt 
be  confirmed  by  the  authors  of  that  bill  or  anyboc^y  else  who  knows 
what  he  is  talking  about.  The  Commission  had  nothing  to  do  Avith  it. 
Mr.  Bond  just  naturally  assumed  it  because,  in  company,  as  I  say, 
with  his  coadvocates  here,  he  assumed  that  the  Commission,  of 
course,  was  at  the  basis  of  trying  to  get  some  more  poAver  and  to  do 
that  which  is  unreasonable. 

Senator  Cakmack.  It  Avould  be  just  as  reasonable  to  assume  that 
it  Avas  Avritten  at  the  White  House. 

Mr.  Clements.  "Well.  I  should  think  so;  or  anyAvhere  else.  A 
great  many  things  have  been  assumed.  It  has  been  assumed  that 
the  Commission  started  out  with  an  unwarranted  assumption  of  au- 
thority, headed  by  Judge  Cooley,  and  Judge  Cooley  is  continually 
praised,  and  I  join  in  his  praise,  for  his  is  a  great  name.  These 
gentlemen  praise  him  wheneA^er  they  feel  he  has  said  something 
which  can  be  used,  as  they  think,  in  some  form  about  the  present  con- 


t2  REGULATION    OF    RAILWAY   RATES. 

■ditions*;  but  I  have  called  up  the  testimony  of  Mr.  Morrison,  who 
was  on  the  original  panel,  to  show  that  there  never  was  a  member 
■of  the  Commission  who  questioned  it  or  who  failed  to  join  in  one  of 
these  orders,  and  that  included  Judge  Cooley. 

Senator  Dolliver.  Judsre  Coole}'  wrote  some  of  the  orders,  did  he 
not? 

Mr.  Clements.  Yes;  he  did.  Now,  what  has  the  Commission 
done  since  that?  It  has  from  year  to  year  recommended  certain 
amendments,  among  which  was  that  the  law  ought  to  be  made  effect- 
ive to  the  correction  of  an  unreasonable  rate  when  it  is  ascertained 
upon  the  facts  and  the  parties  have  been  heard;  that  is  -as  far  as 
it  has  ever  gone.  The  Commission  has  never  asked  for  authority 
to  make  everybody's  rates  arbitrarily  or  any  other  way.  It  has  never 
asked  for  authority,  and  it  does  not  recommend  any  authority,  to 
originate  rates,  to  lay  its  hands  upon  rates  in  general;  and  it  is  an 
assumption  without  reason  that  the  Commission  is  moved  in  this 
matter,  as  we  are  frequently  told,  by  a  simple  thirst  and  desire  for 
more  power.  Power  for  what,  and  why?  Why  should  the  Com- 
mission put  itself  in  such  an  attitude  in  an  idle  and  baseless  demand 
for  power?  Just  to  bring  trouble  and  turmoil  upon  itself  and  every- 
body else  connected  with  these  questions?  Why,  there  is  no  clamor, 
we  are  told ;  there  is  nothing  to  complain  about,  and  all  the  clamor 
there  is — it  has  been  characterized  differently  from  time  to  time,  this 
feeling,  sometimes  being  called  "  clamor,''  sometimes  "  an  outcry," 
sometimes  a  '•  misguided  argument  or  sentiment,"  and  a  "  misleading 
sentiment  " — all  this  clamor  is  without  cause. 

These  gentlemen  have  used  all  these  terms.  They  have  applied 
those  terms  to  the  Commission  in  their  criticism  of  the  Commission 
about  its  desire  for  authority,  about  its  recommendations,  which  were 
official  and  which  were  made  under  oath  in  the  exercise  of  a  duty. 
How  would  you  have  it  do — run  away  from  these  things? 
Would  these  gentlemen  have  the  Commission  run  awaj^  from  its 
responsibility  in  reporting  the  facts  as  they  are  developed  and  its 
judgment  as  to  ^vhat  ought  to  be  done  as  the  law  requires  it  to  do? 
Because  it  has  done  that,  all  this  flood  of  criticism  has  come  upon  it, 
and  from  what  source  and  why?  When  they  speak  of  Mr.  lioose- 
velt,  the  President  of  the  United  States,  as  a  gentleman  did  here, 
occupying  the  same  position  as  the  Commission,  they  knoAv  that  the 
Commission  has  never  recommended  or  asked  for  anvthino-  more 
than  the  President  recommends  or  suggests,  but  the  President  is 
spoken  of  with  great  reverence,  and  justly  so.  The}'  do  not  assume 
to  criticise  him,  but  because  the  Commission  has  done  it,  it  is  ineffi- 
cient, it  is  greedy  for  poAver,  it  is  reckless,  it  would  ruin  this  vested 
property  and  the  vested  rights  in  it — destroy  it,  as  Mr.  Hill  said, 
like  a  freeze,  or  a  frost — anarchy,  revolution,  chaos,  ruin,  all  over 
night — there  would  not  be  any  credit  to  buy  bonds  with,  to  float 
bonds,  to  get  money  to  double  track,  to  build  the  bridges,  to  carry 
the  people's  freight — save  us  from  such  an  institution  as  this. 

Why,  jNIr.  Hill  said,  in  discussing  this,  that  the  Commission  might 
well  haA^e  found  something  to  do  in  investigating  and  dealing  with 
the  terminal  charge  in  Xew  York.  He  said,  "  Why  should  they  be 
allowed  there  to  charge  more  for  floating  over  the  Harlem  River  to 


REGULATION    OF    RAILWAY   RATES.  73 

New  York  than  the  entire  rate  on  grain  from  the  West?  "  Well, 
that  must  have  been  very  impressive.  I  think  one  member  of  the 
committee,  whom  I  have  the  pleasure  of  knowing,  but  who  is  not 
here  now,  asked  him  if  that  was  not  a  matter  with  which  the 
Commission  could  deal  under  the  Elkins  Act.  Of  course  it  was, 
and  perhaps  under  the  prior  act,  because  they  are  required  to 
publish  their  terminal  rates,  and  so  forth.  He  was  not  asked  to  tell 
what  he  meant  by  this  startling  assumed  statement  of  a  if  airs.  There 
will  be  something  nice  for  tlie  Conunission  to  busy  itself  about,  and 
that  a  court  would  probably  be  slow  to  say  that  they  might  charge 
more  for  that  little  terminal  floating  service  than  the  entire  through 
rate  to  New  York.  Well,  I  should  think  it  would.  I  do  not  disagree 
with  Mr.  Hill  about  that,  but  the  trouble  is  that  there  is  no  such 
condition  as  that.  There  is  no  such  state  of  facts  as  that.  There 
never  was  any  such  state  of  facts  as  that,  except  possibly  in  the  ex- 
treme of  some  rate  war,  where  everything  goes  to  pieces,  like  a  year 
or  two  ago.  when  they  were  carrying  grain  from  the  Lakes  down  to 
Philadelphia  for  "2  mills — those  odd  and  abnormal  things  that  hap- 
pen in  a  rate  war. 

I  will  not  say  that  such  a  thing  as  that  never  happened.  I  think  I 
remember  when  I  was  a  younger  man  of  a  rate  war  down  in  the 
South  when  they  paid  a  little  premium  to  get  it  away  from  the  other 
roads.  That  is.  they  paid  the  shipper  a  premium  in  order  to  win  the 
freight.  But  there  fs  no  such  condition  as  that  now  in  New  York, 
and  there  never  is  when  matters  are  normal.  This  picturesque,  able, 
and  distinguished  gentleman  who  has  done  so  much  to  develop  mat- 
ters in  the  Northwest — and  he  is  an  able  and  a  practical  man — does 
not  think  that  his  road  ought  to  be  regulated.  None  of  them  think 
that  any  road  ought  to  be  regulated.  He  does  not  believe  in  regula- 
tion. Then  he  talked  about  everything  being  all  right;  that  there 
were  no  rates  that  needed  correction,  no  unreasonable  rates,  and  that 
no  railroad  is  going  to  make  an  unreasonable  rate.  A\liy?  Because, 
as  you  were  told  this  morning,  that  the  interests  of  the  railroads  and 
its  patrons  are  so  bound  up  together  that  the  very  life  of  the  railroad 
depends  on  the  prosperity  of  the  patrons,  and  therefore,  in  its  own 
selfish  interests,  it  can  do  no  wrong  in  respect  to  these  matters  of  rates. 

That  was  Mr.  Hill's  attitude  in  substance  about  the  matter,  and  yet, 
when  he  wanted  to  say  that  the  Commission  was  idle  and  not  doing- 
its  duty  and  cast  an  aspersion  upon  it.  he  said,  ^'  Why,  here  is  a  rate 
in  the  Southwest  on  engines  that  for  500  miles  was  as  much  as  it  was 
over  his  own  line  from  Philadelphia  to  Yokohama,  across  the  conti- 
nent and  across  the  ocean."  Somebody  asked  him  about  that;  if  he 
thought  that  rate  was  too  high.  Oh,  yes,  he  said  he  thought  it  was 
about  twice  as  high  as  it  ought  to  be.  That  is  in  one  breath.  There 
are  no  unreasonable  rates  in  one  breath.  The  railroads  are  incapa- 
ble of  making  them,  because  for  their  own  selfish  interests  they 
would  not  do  it,  and  then,  on  the  next  page,  he  says,  in  effect.  Here  is 
a  rate  that  is  100  per  cent  too  high,  and  therefore,  to  that  extent, 
unreasonable  and  unlawful.  It  was  because  the  Commission  had  not 
found  it.  He  did  not  say  what  road  that  was  on.  He  was  not  asked 
to  say,  and  he  did  not  state  any  fact  that  you  could  lay  your  hand  on. 
Then  he  went  on  and  quoted  from  the  Lord's  prayer,  "  Deliver  us 


74  REGULATIOK    OF    RAILWAY    RATES. 

from  temptation."  applying  that  to  the  Commission,  and  practically 
saying  that  that  was  his  advice. 

That  was  practically  his  advice  to  the  Commission — "  Deliver  us 
from  temptation."  Undoubtedly  he  meant  in  trying  to  get  too  much 
power;  to  become  the  five  greatest  men  in  all  the  world  about  these 
matters.  Then  he  said  that  those  who  had  come  in  contact  with  the 
Commission  knew  that  it  Avas  incapable  of  dealing  with  these  great 
questions  in  the  proper  way.  I  am  not  trying  to  use  h'.s  exact  words, 
but  I  am  not  misquoting  the  meaning  of  what  he  said,  as  you  will 
bear  witness.  Xow.  I  have  been  on  the  Commission  for  thirteen 
years,  and  the  only  time  that  I  have  ever  known  that  the  Commission 
came  into  contact  with  Mr.  Hill,  and  he  with  it.  was  whon  we  investi- 
gated the  Northern  Security  Case  or  the  Northern  Security's  plan. 
He  was  a  witness  before  the  Commission  at  that  time  and  gave  his 
testimony.  AAlien  the  Commission  got  through  the  Department  of 
Justice  asked  for  the  testimony  that  had  b?en  taken  before  the  Com- 
mission in  that  case,  in  which  Mr.  Hill  and  many  other  of  his  co- 
workers in  the  railroad  business  of  the  same  grade  testified.  The 
Government  of  the  United  §tates  instituted  a  proceeding  against 
that  under  the  antitrust  law.  and  the  Supreme  Court  of  the  United 
States  held  that  that  institution  and  transaction  and  the  whole  thing 
was  a  conspiracy  under  the  antitrust  law. 

Senator  Kean.  I  would  like  at  this  time  to  call  your  attention  to 
another  case  which  I  will  show  you. 

Mr.  Clements.  The  Senator  from  NeAv  Jersey  calls  my  attention 
to  an  utterance  made  by  the  Commission  to  which  I  will  refer  in  a 
few  moments.  I  was  speaking  of  Mr.  HilFs  rash  utterances  in  dis- 
paragement of  the  Commission.  One  of  his  utterances  implied  that 
there  was  a  terminal  charge  at  New  York  for  floating  on  the  Harlem 
River  to  New  York  at  a  sum  greater  than  the  through  rate  on  grain 
from  the  West,  and  I  had  already  stated  that  there  was  no  such  con- 
dition. I  also  want  to  sav  that  the  lighterage  chartre,  which  has 
again  and  agaiji  been  explanied,  does  applv  on  floating  grain  across 
the  river  from  the  Jersey  side  into  New  York,  and  that  is  usually  a 
charge  of  3  cents.  There  is  a  floating  or  lighterage  charge  which 
the  carriers  bringing  the  grain  to  the  river  on  the  Jersey  side  put  in 
for  floating  it  across  the  river  into  New  York.  That  is  not.  however, 
a  terminal  charge  in  any  true  sense.  It  is  not  contracted  as  a  terminal 
charge.  It  is  what  the  delivering  road  which  makes  the  last  haul 
charges  in  a  division  of  the  through  rate  from  the  West  to  New  York, 
not  to  Jersey  City  or  to  Hoboken  or  to  any  of  those  places  on  that 
side  of  the  river,  but  there  is  a  through  rate  charged  from  the  western 
point  to  New  York  proper,  and  that  includes  the  transportation  across 
the  riA^er  at  New  York,  and  the  delivering  road  which  does  that 
in  its  own  floating  vessels.  AAhich  is  a  part  of  its  line,  takes  3  cents 
out  of  the  through  rate  before  prorating  the  balance  between  the 
connecting  lines  that  ha^e  originated  it  in  the  western  points. 

So  that  it  is  no  more  a  terminal  charge  than  is  the  division  of  the 
last  road  in  every  connecting  through  route  on  any  transportation. 
It  is  not  any  sort  of  terminal  charge  that  the  law  requires  to  be 
separately  charged.  "  There  is  no  secret  about  it.  It  is  a  division  of 
the  through  rate,  and  the  criticism  was  wholly  unwarranted  by  the 


REGULATION    OF   BAIL  WAY   RATES.  75 

facts  or  by  any  interpretation  of  the  law  as  apjjlied  to  the  facts  that 
exist.  Now,  I  did  refer  to  this  gentleman's  use  of  that  portion  of  the 
Lord's  prayer,  "  Deliver  us  from  temptation,"  which  meant  that  this 
Commission  ought  to  keep  out  of  temptation  to  seek  more  unnecessary 
power,  and  I  refer  to  the  further  statement,  which  was  to  the  effect 
that  those  who  came  in  contact  with  the  Commission  knew  perfectly 
well  that  it  was  not  competent  to  deal  with  these  questions.  That  was 
the  substance  of  it,  and  I  repeat  that  the  only  time  since  I  have  been 
on  the  Commission  that  he  has  had  contact  with  the  Commission, 
or  the  Commission  has  had  with  him,  was  when  it  investigated  the 
Northern  Securities  scheme,  in  which  he  was  a  witness  and  told  of 
the  scheme,  and,  of  course,  we  never  convinced  him  that  that  was  a 
bad  thing  to  do.  The  Supreme  Court  doubtless  has  failed  to  convince 
him  that  it  was  not  a  good  thing  to  do.  Pie  expresses  with  freedom 
his  contempt  for  the  views  of  the  Commission  about  these  questions. 
Like  other  witnesses  who  have  appeared  here,  or  advocates,  he  is 
not  so  ready  to  express  his  dissenting  views  from  the  court,  and  from 
the  President  of  the  United  States,  but  he  focalizes  his  wrath  upon 
the  Interstate  Commerce  Commission.  The  Supreme  Court  of  the 
United  States  in  that  case  held  that  that  was,  as  I  repeat,  a  con- 
spiracy in  violation  of  the  criminal  provisions  of  the  antitrust  law, 
and  whatever  else  may  be  said  of  the  Interstate  Commerce  Com- 
mission, the  judicial  power  of  the  United  States  has  never  yet  been 
called  upon  to  restrain  it  from  committing  a  crime  against  the 
public  under  the  interstate-commerce  law  or  the  antitrust  law.  Mr. 
Hill  further  said : 

A  year  ago  we  were  carrying  flour  from  Minnesota  to  Australia  and  to  China 
and  to  Japan,  but  tlie  Interstate  Commerce  Commission  came  in  and  affixed 
a  condition  that  compelled  us  to  stop  carrying  the  trade. 

Senator  Forakek.  Wliat  was  that  condition? 

Mr.  Hill.  They  said,  "You  must  file  with  us  your  through  rate  and  your 
proportion  as  between  your  ships,  whether  it  is  your  ship  or  anybody  else's,  with 
us  in  Washington."  We  said,  "  If  we  file  a  rate,  it  is  a  published  rate,  and  the 
German  ship  or  the  British  ship  or  the  Dutcli  ship  or  the  Norwegian  ship  or  the 
Italian  ship  is  under  no  such  obligation,  and  we  can  not  change  it  after  we  have 
filed  it  with  you.  without  notifying  j'ou,"  etc. 

Now,  there  is  a  statement  that  the  Commission  had  fixed  a  condition 
which  broke  up  this  beneficent  business,  good  for  the  railroad  that 
Mr.  Hill  represents,  good  for  the  public,  and  good  for  all  American 
people  to  dispose  of  their  surplus,  etc. 

Senator  KeajST.  What  was  the  fact? 

Mr.  Clements.  I  was  just  coming  to  that.  The  Commission  had 
held  an  inquiry  in  respect  to  the  matter  of  the  publication  of  tariffs 
on  exports  and  imports,  and,  having  called  in  the  railway  people, 
notified  all  of -them  and  heard  what  they  had  to  say  about  it,  wrote  up 
what  it  believed  to  be  the  facts  and  the  requirements  of  law  in  respect 
to  that  matter. 

Senator  Kean.  In  this  instance  did  you  try  to  compel  the  Great 
Northern  road  to  file  their  rates? 

Mr.  Clements.  No,  sir;  we  did  not.  We  ascertained  the  facts 
and  presented  them  in  a  report,  as  the  law  requires,  and  presented 
our  conclusions  in  respect  to  it,  and,  reading  the  sixth  section  of  the 
act  to  regulate  commerce,  which  requires  all  interstate  rates  and 


76  EEGULATION"    OF   EAILWAY   RATES. 

foreign  rates  in  respect  to  these  matters  to  be  published  and  filed,  we 
could  not  do  anj'thing  except  to  find  that  the  law  requires  what  it 
says. 

Senator  Kean.  Is  there  not  a  limitation  on  that? 

Mr.  Clements.  No.  The  Commission  had  investigated  this  years 
ago  and  listened  to  the  complaints  of  carriers  to  the  effect  that  literal 
compliance  with  that  in  respect  to  import  and  export  would  embar- 
rass them  in  many  respects  in  this  oriental  business  and  in  other  re- 
spects, and  in  its  annual  report  to  Congress  had  set  out  these  difficulties 
which  they  encountered  in  complying  with  that  provision  of  the  law 
in  regard  to  export,  and  had  invited  the  attention  of  Congress  to  it  as 
a  thing  in  which  they  ought  in  some  respect  to  be  relieved  from  the 
embarrassment  and  trouble.  The  matter  kept  on.  Complaints  were 
made  to  this  effect.  I  remember  once  when  we  were  making  a  gen- 
eral inquiry  about  grain  rates  and  packing  house  product  rates 
from  Kansas  City — the  inquiry  was  in  regard  to  rebates — one  gentle- 
man suggested  there  might  be  a  cessation  of  rebates  in  respect  to  do- 
mestic business,  possibly,  carried  wholly  in  the  United  States,  but  so 
long  as  the  export  rates  were  not  published  and  not  required  to  be 
published  and,  in  fact,  were  not  published,  that  it  was  an  easy  mat- 
ter for  a  packing  house  to  give  its  business,  both  domestic  and  export, 
to  a  railroad,  and  pay  the  full  rate  on  the  domestic  and  take  whatever 
it  pleased  in  the  way  of  rebates  out  of  the  export  business. 

If  there  is  to  be  no  established  tariff',  or  if  there  be  one  that  is  not 
required  to  be  published,  or,  if  published,  it  is  not  required  to  be  ad- 
hered to,  and  the  provisions  of  the  sixth  section  do  not  apply  to  export 
business,  it  needs  only  a  suggestion  to  indicate  that  a  business  that  is 
carried  on  partly  export  and  partly  domestic  can  pay  the  full  rate 
on  the  domestic  business  in  which  the  tariff  is  published  and  do  what 
it  pleased  in  respect  to  the  balance.  So,  the  Commission  never  com- 
pleted this  case,  knowing  that  many  roads  did  not  publish  these 
export  rates,  claiming  they  could  not  do  it  without  embarrassment, 
and  it  did  not  proceed  to  enjoin  or  indict,  but  it  called  the  carriers 
together  and  heard  all  the}'  had  to  say,  and  wrote  up  the  result,  and 
here  it  is,  and  after  finding  that  the  law  requires  it  and  that  the  Com- 
mission has  no  discretion  under  the  law  to  waive  it,  it  concluded  the 
case  with  this  paragraph: 

Upon  the  whole,  we  are  inclined  to  leave  this  matter  as  it  is  until  oppor- 
tunity has  been  afforded  carriers  to  adjust  their  tariffs  and  arrangements,  and, 
if  so  advised,  present  this  matter  to  Congress  ;  provided,  however,  that  in  the 
meantime  all  carriers  that  do  not  maintain  export  and  import  tariffs  shall  file 
with  the  Commission,  as  promptly  as  possible,  a  statement  of  the  rates  actually 
charged.  It  is  evident  there  must  be  uniformity  in  the  enforcement  of  these 
provisions  of  the  act.  One  carrier  can  not  be  expected  to  publish  and  maintain 
its  tariffs,  while  its  competitor  is  relieved  from  that  obligation.  If  the  act 
is  not  amended  within  a  reasonable  time,  it  will  be  our  duty  to  enforce  it. 

That  remains  that  way  to  this  day.  That  Avas  done  before  the 
assembling  of  the  last  Congress — ]Derhaps  the  early  part  of  last  year — 
and  yet  Mr.  Hill  comes  in  and  tells  you  that  the  Commission  created 
a  condition  which  destroyed  this  foreign  business  on  flour;  and  the 
Commission  took  the  responsibility,  in  view  of  the  embarrassment 
that  might  arise  in  respect  to  this  matter,  and  which  had  arisen,  and 
knowing  the  fact  that  there  was  not  a  general  compliance  with  this 


EEGULATION    OF    KAIL  WAY    RATES.  77 

requirement  of  the  Irav.  Some  rates  were  published  and  some  we^e 
not,  and  it  has  presented  the  matter  in  that  yvay  and  taken  the  respon- 
sibility of  waiting  to  see  what  might  be  done  before  undertaking  to 
create  a  hard  condition. 

Senator  Dollivek.  In  other  words,  you  practicallj^  suspended  that 
part  of  the  law  ? 

Mr.  Cleinients.  We  ignored  that  requirement  of  the  law,  which  is 
a  pretty  serious  responsibility  for  an  administrative  board  to  take 
upon  itself,  and  we  did  it  in  tlie  belief  that  there  was  a  good  reason 
which  was  presented,  and  it  was  not  done  secretly.  It  was  put  into 
a  published  report  and  the  Congress  was  advised  of  it,  and  the  reasons 
for  it ;  and  yet  after  all  that  has  been  done  and  that  responsibility 
taken,  in  order  to  prevent  the  very  thing  that  Mr.  Hill  says  the  Com- 
mission has  enforced  upon  him,  he  comes  here  and  says  that  the 
Commission  created  this  condition. 

Now,  a  good  deal  has  been  said  in  respect  to  certain  cases  that  the 
Commission  has  disposed  of.  Professor  Meyer,  assistant  professor 
of  economics  in  the  Chicago  University,  appeared  before  the  com- 
mittee a  few  days  ago  and  gave  testimony  in  which  he  referred  to 
what  is  called  the  "  Milk  Case,"  which  was  decided  by  the  Commission 
some  years  ago,  and  he  brushed  it  aside  as  one  of  the  very  plain  cases 
of  incompetency  and  inefficiency  on  the  part  of  the  Commission, 
because  there  was  one  rate  from  any  place  within  about  300  miles  from 
New  York  on  milk,  and  the  complaint  was  made  that  it  created  an 
undue  discrimination  between  the  localities  near  by  and  those  far 
away.  The  Commission  heard  the  case,  which  was  presented  by  able 
counsel,  including  Mr.  Choate,  who  represented  the  milk  dealers  that 
were  comj)laining,  and  the  producers  and  dealers  that  were  complain- 
ing of  the  discrimination,  and  able  counsel  on  the  other  side,  there 
being  a  thorough  investigation,  and  the  Commission  held  that  there 
was  a  discrimination  there  in  favor  of  the  far-away  points  as  against 
the  near-by  points  and  recommended  a  scale  of  rates  which  were 
higher  for  the  far-off  points  than  for  the  near-by  points.  That  was 
the  whole  sum  of  that  case. 

The  Chairman.  Do  you  remember  the  adjustment  now?  Did 
you  put  it  in  zones? 

Mr.  Clesxents.  We  put  it  in  zones. 

The  Chairman.  Can  you  state  now  from  memory  how  that  is 
distributed  over  the  300  miles  ? 

Mr.  Clements.  I  can  not  from  memory.  I  could  file  here  the 
Commission's  report  and  the  specific  finding  and  disposition  of  the 
case  if  desired. 

The  CirAiRMAN.  Was  there  any  appeal  from  that  case? 

Mr.  Clements.  No  appeal. 

The  Chairman.  It  was  acquiesced  in? 

Mr.  Clements.  Yes. 

The  Chairman.  I  wish  you  would,  as  a  matter  of  information, 
because  we  have  had  this  subject  up  before,  file  just  what  the  find- 
ings were — that  is,  the  rates — how  many  groups  3'^ou  made,  and  the 
rates. 

Mr.  Clements.  If  you  will  allow  me,  I  will  file  the  report  of  the 
Commission  in  that  case. 


78  REGULATION    OF   RAILWAY   RATES. 

The  Chairman.  Well,  an  extract  from  it. 

Mr.  Clements.  Yes;  we  will  do  that. 

Senator  Cullom.  File  what  is  strictlj^  pertinent  to  your  conclu- 
sion. 

The  Chaie^nean.  We  do  not  want  the  whole  report.  There  seems 
to  be  some  confusion  in  the  minds  of  the  committee  about  it. 

Senator  Dolliver.  There  were  several  of  these  milk  cases. 

Mr.  Clements.  I  think  there  were  some  others  at  other  times. 

Senator  Dolliver.  I  read  one  of  them  where  the  decision  seemed 
to  be  that  the  end-of-the-route  men  should  have  the  same  privilege 
as  the  near-by  men. 

Mr.  Clements.  I  do  not  know  what  case  you  refer  to. 

Senator  Dolliver.  I  think  that  was  the  first  milk  case.  It  is  in 
one  of  the  early  reports  of  the  Commission. 

Mr.  Commissioner  Knapp.  That  was  one  which  was  only  100  miles 
out. 

Senator  Dolliver.  I  think  it  was  200  miles. 

Mr.  Commissioner  Knapp.  It  may  be;  I  do  not  remember  about 
that. 

Mr.  Clements.  I  will  have  to  look  up  the  record  about  that,  be- 
cause I  did  not  participate  in  that  case.  It  was  an  earlier  one  than 
my  connection  with  the  Commission.  I  was  with  the  Commission 
in  this  New  York  case,  and  this  same  assistant.  Professor  Meyers, 
finds  fault  with  the  fact  that  the  Commission  took  in  this  blanket 
rate  and  split  this  up  and  said  there  was  something  connected  with 
a  man's  geographical  position  which  affected  the  matter  of  costs, 
and  the  considerations  are  set  forth  in  the  report.  Yet  it  is  brushed 
aside  by  this  doctrinaire,  who  from  his  sanctum  reads  about  rates 
in  Germany  and  elsewhere  without  going  over  there  to  investigate 
the  conditions  or  knowing  anything  about  them  in  a  practical  way, 
and  he  is  deemed  a  wise  adviser  here  by  these  gentlemen  Avho  tell 
you  that  nobody  knows  anything  about  rates  except  them,  and  a  man 
who  knows  about  it  must  be  in  it  all  the  time  himself  in  a  practical 
way.  Yet  here  is  this  professor  who  said  he  had  not  been  to  Ger- 
many and  he  was  discussing  rates  and  conditions  in  Germany,  which 
he  said,  he  had  read  in  reports,  etc. 

Then  he  referred  to  another  case  where  the  vegetable  rates  into  the 
city  from  near-by  points  and  far-away  points  were  involved,  and  the 
Commission  there  decided  there  was  some  discrimination  when  the 
rate  was  the  same,  regardless  of  distance,  when  the  distance  was 
great;  and  he  said  that  was  a  case  in  which  one  Mr.  Kay  com- 
plained to  the  Commission,  and  the  Commission  found  error.  Well, 
we  have  always  supposed  that  one  Mr.  Ray,  although  he  may  be 
somewhat  small  in  the  eyes  of  the  doctrinaire  who  promulgates 
theories  for  the  Government  of  all  conditions,  still  is  entitled  to  his 
protection  and  his  equal  opportunities  under  the  laws  of  the  United 
States  as  we  understand  them.  Then  the  professor  said  m  substance 
that  the  Interstate  Commerce  Commission  could  never  see  anj'thing 
except  that  the  price  of  somebody's  land  was  falling  off,  or  that  a 
mill  which  produces  50  barrels  of  flour  a  day  was  falling  off  in  its 
production  on  account  of  some  rates.  Well,  how  is  it  possible  for  a 
man  to  answer  such  statements  as  this  according  to  their  folly?  It 
has  been  said  that  aristocracy  wherever  it  exists  will  always  dictate 


REGULATION    OF    RAILWAY   RATES.  79 

public  sentiment.  We  have  none  in  this  country  except  as  wealth 
creates  distinctions  of  that  sort. 

Wealth  always  finds  it  is  easy  to  employ  men  of  theor}^  and  doc- 
trine and  ability  to  express  its  views,  and  they  are  often  directed  to 
educating  the  public  up  to  the  idea  of  the  superior  sanctity  of  vested 
rights  as  against  individual  rights  and  individual  opportunities  in 
the  contests  in  which  men  engage  in  the  different  walks  of  life.  It 
is  ordinarily  to  be  expected  that  these  gentlemen  would  attack  a 
doctrine  or  practice  that  was  at  variance  to  the  doctrines  dear  to  the 
patron  saint  of  that  institution  whose  colossal  fortune  had  its  incep- 
tion and  support  to  a  large  measure  in  the  rebates  in  the  early  times 
of  this  business  of  Standard  Oil,  etc.,  which  canie  like  a  mildew,  like 
an  overreaching  cloud  that  leveled  all  competitors  and  gave  the 
field  to  him,  a  position  he  still  occupies.  They  employ  not  only  able 
lawyers  and  other  people  to  rej^resent  their  views  as  a  means  of  dis- 
seminating their  doctrines,  but  they  found  colleges  and  institutions 
of  learning  that  the  younger  generation  may  be  taught  the  superior 
sanctity  of  vested  rights  and  vested  propert5^ 

Now,  if  the  Interstate  Commerce  Commission  should  bring  in  here 
a  professor  who  had  never  had  anything  to  do  with  the  practical 
affairs  of  railroads,  how  much  Avould  the  railroads  accept  his  views 
as  sustaining  the  views  of  the  Commission?  Wh}'^,  this  must  all  be 
done  b}^  the  practical  men,  they  say,  who  have  grown  up  with  the 
business,  who  know,  as  nobody  else  does,  who  have  the  precise  knowl- 
edge for  regulating  all  these  varying  conditions  from  time  to  time, 
the  cost  of  service,  the  cost  of  movements,  the  value  of  the  service  to 
the  shipper,  and  the  fluctuating  interests  manifested  in  competition. 
It  requires  a  man  who  is  constantly  in  the  business,  they  say,  who 
has  done  nothing  else,  who  has  all  the  exact  knowledge  to  fix  and 
arrange  these  things  with  a  nicetj^,  and  perfect  justice  and  equality 
between  every  man  and  every  interest.  Why,  Mr.  Chairman  and 
gentlemen,  no  man  has  that.  No  railroad  president  has  it;  no  rail- 
road traffic  man  has  it.  Mr.  Stickney  is  right  when  he  says  there 
is  no  such  precise  knowledge  as  that.  There  is  none  attainable.  The 
most  that  can  be  done  in  an  effort  to  do  justice  and  equality  in  this 
matter  is  an  approximation. 

Is  there  any  exact  knowledge  that  enables  a  jury  of  twelve  men 
to  tell  you  exactly  to  a  cent  how  much  you  are  damaged  in  a  case  of 
tort  or  any  other  matter  that  becomes  an  issue?  It  is  an  estimate:  it 
is  the  conscience;  it  is  ordinary  practical  judgment  and  common  sense 
applied  to  the  facts— an  effort  to  say  what  is  right.  That  is  the  ut- 
most that  can  be  done  in  many  of  these  matters.  It  is  a  false  pre- 
tense that  there  is  any  such  thing  had  or  attainable  as  precise  knowl- 
edge, which  enables  anvbody  to  do  these  things  with  nicetv  or  exact 
justice.  Since  this  can  not  be  done  it  is  manifestly  unjust  that  the 
shipper  should  make  the  rate  for  the  railroads,  because  he  is  inter- 
estecl;  but  it  is  equally  unjust,  if  the  shipper  has  any  right  in  the 
question,  that  he  should  have  no  voice,  and  that  the  other  party  at 
interest  in  res23ect  to  the  matter  should  have  the  making  of  the  rates 
without  let  or  hindrance.  The  question  is  whether  or  not  some  disin- 
terested tribunal  upon  conscience  and  upon  oath  and  official  responsi- 
bility shall  determine  that.     I  do  not  say  that  the  Interstate  Com- 


80  REGULATIOlSr    OF    RAILWAY   RATES, 

merce  Commission  shall  do  it.  Many  times  this  Commission  has 
called  attention  to  the  need  of  such  a  tribunal.  It  has  more  often 
suggested  some  ])ublic  tribunal  tlian  it  has  eAer  said  or  suggested  the 
Interstate  Commerce  Commission  should  do  the  same. 

The  law  says  the  rates  shall  be  reasonable  and  just.  It  has  assumed 
that  there  is  such  a  thing  possible  as  an  unreasonable  rate,  and  it  has 
made  that  unlawful.  Not  only  the  shippers,  but  other  parties  injured 
by  a  rate  are  authorized  now  to  file  a  complaint  alleging  unlawfulness 
and  extortion  in  rate.  The  law  does  not  permit  merely  the  Inter- 
state Commerce  Commission  to  investigate  it,  but  it  requires  and 
demands  it  to  report  upon  it.  to  report  the  facts  and  to  report  its  con- 
clusions. That  assumes  that  there  is  such  a  thing  possible  as  an 
unjust  and  unreasonable  rate.  It  assumes  that  the  shipper  or  the 
consumer  or  somebody  besides  the  railroad  has  an  interest  in  it,  a 
lawful  interest,  a  right  to  question,  a  right  to  put  it  in  issue.  "Where- 
upon, if  that  be  so,  is  it  not  an  anomaly  that  in  this  particular  busi- 
ness or  matter  one  of  the  parties  at  interest  shall  determine  what  is 
right,  and  the  other  shall  be  left  without  any  voice  in  the  matter? 
What  is  asked  for  is  that  the  shipper  may  have  the  right  somewhere 
along  the  line  to  be  heard  in  resj^ect  to  this  question  in  which  he  has 
a  recognized  lawful  right. 

Now,  is  there  amthing  unreasonable,  irrational,  revolutionary, 
extreme  about  that?  Are  not  the  tribunals  of  the  country  open  for 
the  settlement  of  controversies  by  juries  and  by  courts  in  respect  to 
all  other  matters?  AVhat  is  there  revolutionary  about  this?  From 
time  immemorial,  in  controversies  in  which  the  parties  are  at  issue, 
and  in  which  both  have  a  right,  the  common  law  has  stepped  in  and 
settled  those  controversies  by  outside  parties.  "When  you  call  a  jurj'^ 
to  settle  a  controversy  between  two  parties  you  obtain  a  jury  that 
knows  the  least  about  it.  in  order  that  it  may  be  impartial.  Is  it 
impossible  that  a  commission  composed  of  five  or  seven  men.  one 
coming  on  at  a  time  and  going  on  in  that  way,  shall  attain  that  knowl- 
edge about  these  matters  that  would  enable  it,  after  it  has  heard  both 
sides,  to  do  as  like  tribunals  do  in  other  cases,  and  in  all  things  to  do 
what  is  approximately  fair  and  reasonable  and  right,  and  do  so 
without  any  hope  that  any  tribunal,  or  any  railroad  man,  or  any 
shipper,  or  anybody  else,  can  ever  lay  his  finger  on  the  precise  amount 
that  makes  justice  and  equity  between  both  parties,  something  which 
is  not  attainable?  Is  it  impossible  for  a  tribunal  of  that  sort  to  take 
into  account  the  varying  conditions  when  presented  by  intelligent 
railroad  men  on  one  side  and  shippers  on  the  other,  to  put  all  these 
facts  together,  and  give  them  the  same  sort  of  consideration  which, 
if  it  is  not  based  on  as  full  an  experience  as  a  railroad  man  obtains, 
will- at  least  be  the  judgment  of  a  party  that  is  not  interested  in  the 
matter  ? 

Now,  it  is  said  for  many  reasons  there  is  no  need  of  any  legisla- 
tion. The  first  is  because  everything  is  all  right  anyway;  that  there 
is  no  cause  of  complaint,  and  that  there  is  no  complaint.  Well,  T 
will  not  waste  any  time  on  that.  I  suppose  the  Commission  will  not 
be  charged  with  having  misled  the  President  of  the  United  States. 
I  suppose  it  will  not  be  charged  with  having  indulged  in  this  outcry, 
this  great  clamor  which  has  no  foundation  in  fact  or  in  justice.  It 
is  needless  for  me  to  argue  that  question.  Mr.  Hill  found  a  rate  that 
was  100  per  cent  too  high.     He  did  not  tell  us  where  it  was. 


KEGULATION    OF    RAILWAY    EATES.  81 

The  Commission  has  decided  during  the  years  it  has  been  in  exist- 
ence about  400  formal  comphiints,  and  it  has  made  orders  in  about 
170  of  those.  It  has  dismissed  or  otherwise  disposed  of  about  230. 
This  inchides  the  cases  in  Avhich  it  found  with  the  railroad  as  against 
the  complainant,  and  some  others  have  been  in  cases  where  the  cause 
of  complaint  was  removed  either  before  the  taking  of  the  testimony  or 
afterwards  before  the  decision,  and  in  various  ways  they  went  out. 
A  large  number  of  them  are  cases  in  which  the  Commission  decided 
with  the  railroads.  In  the  cases  in  which  mandatory  orders  were 
made  and  complied  with  there  are  about  94.  The  number  in  which 
mandatory  orders  were  partially  complied  with  is  21;  the  number 
in  which  orders  were  disobeyed,  55 ;  suits  brought  in  court  to  enforce 
orders  which  were  ignored,  about  48. 

Senator  Cullom.  Those  are  all  in  addition  to  the  cases  where  you 
settled  them  in  an  informal  w^ay  ? 

Mr.  Clejnients.  Yes ;  these  are  simply  the  formal  complaints  where 
a  petition  has  been  jfiled  and  an  answer  made,  and  the  Commission  has 
heard  the  case,  like  a  proceeding  in  court,  and  disposed  of  it.  There 
are  a  number  of  other  cases  that  have  not  proceeded  that  far  that  have 
been  disposed  of  in  one  w^ay  or  another  and  a  number  still  pending, 
and  it  does  not  include  in  this  about  2,300  informal  complaints  which 
have  been  made  in  the  last  five  years,  as  set  forth  in  our  answer. 

Senator  Cullom.  Will  you  state  whether  in  any  of  these  cases  you 
refer  to  that  you  disposed  of  in  a  formal  yvay  j'^ou  attempted  to  settle 
them  before  proceedings  were  begun  ? 

Mr.  Clements.  In  a  great  many  of  these  cases  which  became  formal 
there  was  a  correspondence  and  conference  and  an  effort  to  adjust  the 
matter  before  it  took  that  shape.  A  great  many  of  these  cases  which 
are  in  the  answer  we  have  made  to  your  resolution  showing  about 
2,300  informal  cases  disposed  of  in  the  last  five  years  are  cases  which 
have  been  settled  with  correspondence  without  reaching  the  stage  of 
a  formal  complaint. 

The  Chair:man.  You  have  been  able  to  settle  that  man}^  between 
the  shippers  and  the  carriers? 

Mr.  Clemexts.  No. 

The  Chair:\[an.  ^Vhx,  were  not  the  2.300  cases  disposed  of  satis- 
factorily ? 

Mr.  Cle^ients.  Not  all  satisfactorily.  Let  me  tell  you  about  that. 
That  number  includes  those  brought  up  by  informal  correspondence. 
Some  of  them  grew  into  formal  cases  afterwards.  A  large  number  of 
those  are  overcharge  matters  where  the  rate  can  be  settled — that  is, 
when  the  complaint  comes  in  it  is  referred  to  the  auditor,  who  has 
his  hand  on  the  rates  as  they  are  published  and  filed,  and  he  makes 
up  a  statement  to  see  Avhether  the  rate  charged  was  too  much  or  not, 
and  wdien  he  makes  it  he  says  w^hat  it  ought  to  be,  and  when  that  is 
submitted  to  the  carriers,  if  they  find  that  there  is  no  error  in  that,  as 
they  generally  do,  they  accept  it  as  the  rate  and  promptly  adjust  the 
matter. 

Now",  a  good  many  of  these  cases  were  cases  where  there  was  some 
controversy  about  classification  or  rate,  and  some  of  those  were  ad- 
justed. A  large  number  of  them  are,  however,  cases  where  there  is 
some  correspondence,  and  the  matter  is  taken  up  in  that  way,  and  it 
IS  presented  to  the  roads,  and  they  see  no  way  from  their  standpoint 
741  A— 05 6 


82  EEGULATIOKT    OF    EAILWAY   EATES. 

to  change  the  rates,  and  they  decline  to  do  so,  and  the  shipper  de- 
clines to  file  a  formal  complaint,  and  the  matter  is  practically 
dropped,  so  that  in  many  of  these  cases  not  all  of  them  are  by  any 
means  adjusted.  They  are  adjusted  or  abandoned.  Many  of  them 
are  adjusted,  however,  and  no  doubt  some  of  them  are  cases  that  are 
groundless.  The  Commission  does  not  urge  a  man  to  make  a  formal 
complaint  out  of  his  informal  complaint.  He  is  left  to  determine  the 
matter  for  himself,  and  the  matter  is  often  dropped  at  that.  But  I 
read  these  figures  to  show  that  there  is  no  justification  for  the  idea 
that  is  constantly  brought  forth  in  these  hearings  to  the  effect  that 
the  Commission  has  been  in  an  attitude  of  unjust  hostility. 

Mr.  Kobbins,  I  think,  the  other  day  spoke  of  the  hostilitj^  of  the 
Commission  to  the  car  lines.  Well,  you  know  Avhen  I  used  to  prac- 
tice law  down  in  north  Georgia  and  to  get  around  in  the  justice 
courts  I  used  frequently  to  hear  a  man  who  was  disappointed  at 
something  that  the  justice  of  the  peace  did — go  out  and  curse  the 
court,  as  we  called  it — whether  the  court  was  right  or  w^rong.  Peo- 
ple do  not  like  to  lose  their  cases;  people  do  not  like  to  be  disap- 
pointed, and  people  do  not  like  to  be  investigated  and  to  have  facts, 
which  they  would  rather  not  have  made  public,  exposed;  and  it 
seems  hardly  just  tliat  because  of  these  various  matters  there  should 
be  a  disposition  to  criticise  the  Commission  for  what  it  has  done  and 
to  turn  this  investigation  as  to  what  the  law  should  be  into  a  criti- 
cism and  a  complaint  against  the  Commission  on  the  part  of  these 
people  because  it  has  not  enforced  the  law  against  them.  That  is 
a  peculiar  situation. 

The  Chaieman.  I  desire  to  say  that  it  is  not  necessary  for  jou  to 
come  here  and  defend  the  Commission  at  all. 

Mr.  Clements.  I  am  very  glad  to  hear  that.  I  could  not  know,  of 
course,  how  that  was.  I  saw  it  stated  in  the  paper  a  few  days  ago 
that  whatever  else  might  be  the  result  of  these  hearings,  one  thing 
was  sure — that  from  the  expressions  of  the  committee  the  Commis- 
sion would  be  severely  condemned  and  criticised. 

The  Chairivian.  I  hope  that  you  do  not  believe  all  that  you  see  in 
the  newspapers. 

Mr.  Clements.  No;  and  I  would  not  believe  the  members  of  this 
committee  capable  of  making  up  their  minds  about  this  matter  and 
concluding  so  serious  a  result  as  that  without  hearing  what  we  have 
to  say,  but  it  illustrates  this,  that  there  has  been  a  continued  attack 
day  by  day  from  very  high  sources,  and  these  gentlemen,  as  Pro- 
fessor Meyer,  of  the  Chicago  University,  said  have  greater  imagina- 
tions than  the  poets.  He  thinks  they  have  developed  the  world  and 
the  fullness  thereof,  and  their  imagination  exceeds  the  imagination 
of  the  Grecians  and  the  Eomans  in  the  palmiest  days  of  mythology. 
Now,  these  are  the  gentlemen,  and  it  is  from  their  lofty  standards, 
who  have  day  by  day  testified  to  the  incompetence  of  the  Interstate 
Commerce  Commission.  I  will  not  call  it  testimony.  I  still  say 
that  it  is  advocacy  on  the  part  of  those  employed  on  that  side  of  the 
question.  Do  you  expect  tKem  to  come  in  here  and  court  regulation? 
Did  anybody  ever  court  regulation?  Do  I  think  there  is  any  law 
needed  to  restrain  me  from  robbing 'you  or  otherwise  injuring  you? 
We  make  laws  to  restrain  others,  not  ourselves.  Now,  these  gentle- 
men do  not  court  regulation. 


REGULATION    OF    EAILWAY   RATES.  83 

This  question  was  up  here  for  about  ten  j'ears,  and  the  Senator  from 
Illinois  (Mr.  CuUom),  at  this  end  of  the  Capitol,  and  that  distin- 
guished, honest,  strong  friend  of  justice,  Mr.  Reagan,  of  Texas,  at 
the  other  end  of  the  Capitol,  took  an  interest  in  the  matter  when  it 
was  up  for  about  ten  years.  No  doubt  he  remembers  then  that  he 
heard  the  same  cry — ruin,  chaos,  destruction,  revolution,  bankruptcy, 
widows  and  orphans  that  have  these  bonds  and  stocks,  savings  banks — 
all  of  them.  I  remember  that  it  is  thirty  years  ago  when  I  happened 
to  be  a  member  of  the  legislature  in  Georgia,  when  there  was  a  propo- 
sition then  of  a  law  creating  a  State  railroad  commission.  We  then 
heard  the  same  thing,  that  there  were  to  be  no  more  railroads  built  in 
Georgia,  and  tliat  that  was  to  be  the  end;  there  was  to  be  no  develop- 
ment. The  law,  however,  was  passed,  and  it  has  been  a  law  ever  since, 
and  there  has  been  tenfold  more  authority  delegated  to  the  commis- 
sion than  this  Commission  has  ever  suggested,  until  to-day  they  make 
the  classifications,  have  classified  i-ates,  and  make  the  rates  all  over 
the  State.  One  b}^  one  other  States  have  done  the  same,  and  still 
there  is  hardly  a  road  in  the  country  to-day  in  the  hands  of  the  courts. 
They  used  to  be  at  war  and  they  would  plunge  and  make  rates  that 
were  ridiculous  and  destroy  their  revenues.  They  used  to  be  in  the 
hands  of  the  courts  more  often  than  they  are  now. 
•  I  had  a  conversation  with  Mr.  Peck,  of  Chicago,  the  other  day, 
after  he  made  his  argument.  I  would  say  that  he  was  a  notable 
exception  to  this  disposition  to  place  his  entire  argument  here  upon 
the  faults  of  the  Commission,  supposed  or  otherwise,  and  he  argued 
like  a  lawyer  the  questions  of  law.  After  it  was  over  he  asked  me 
if  I  had  read  his  remarks.  I  said:  "Yes;  you  did  just  exactly  like 
you  would  do  in  a  court-house;  you  did  just  like  a  defendant  or  any- 
body else  would  expect  you  to  do.  You  are  employed  by  the  rail- 
]'oads,  and  you  went  there  as  an  employee  of  the  railroads  to  argue 
their  side  of  the  question."  Now,  did  anj^body  expect  him  to  do 
anything  else?  Did  anybody  expect  him  to  go  and  state  that  his 
road  needed  regulation  because  it  was  charging  too  much  or  because 
it  was  paying  rebates?  Does  anybody  expect  my  friend  Mr.  Hines, 
as  the  lawyer  of  the  Atlantic  Coast  Line,  to  come  up  here  and  tell 
you  that  the  Atlantic  Coast  Line  needs  regulation?  These  gentle- 
men are  not  witnesses;  they  are  advocates.  I  do  not  disparage 
what  they  say  as  men.  I  do  not  expect  them  to  say  anything  except 
an  argument  against  any  regulation  at  all.  That  has  always  been 
so.  But  it  is  said  that  the  interests  of  the  railroads  and  the  inter- 
ests of  the  shipper  are  so  bound  up  together  that  the  carrier  dare  not 
do  any  wrong  to  the  shipper  because  it  would  reflect  against  the 
carrier  in  its  revenues.  In  other  words,  it  is  to  the  interest  of  the 
carrier  to  build  up  the  interests  of  the  shipper  on  its  lines. 

I  concede  that,  and  I  concede  further  that  the  general  policy  of 
the  roads  is  in  that  direction  and  to  that  end.  It  would  be  senseless 
to  expect  anything  else;  but  because  that  is  a  general  policy  it  does 
not  follow  that  there  are  no  cases  of  injustice,  because  some  communi- 
ties have  a  great  deal  more  influence  on  the  management  than  others 
have,  and  when  it  is  left  to  that  sort  of  matter,  to  the  self-interest 
of  the  carrier,  there  are  some  who  can  be  heard,  and  others  are  per- 
haps too  weak  to  be  heard.     It  would  be  a  great  exaction  on  the 


Si  KEGULATIOlSr    OF    KAIL  WAY   KATES. 

time  of  these  gentlemen  if  every  single  shipper  in  every  little  town 
and  hamlet  in  the  countn^  could  come  in  and  be  heardi  but  a  great 
big  chamber  of  commerce  composed  of  capitalists  can  generally  be 
lieard  almost  any  time.  It  would  be  an  anomaly  to  say  that  in' this 
business  the  rights  of  one  party  to  the  transaction  should  be  left  for 
protection  to  the  interests  of  the  other  party.  I  do  not  know  any  other 
dejDartment  of  life,  any  other  line  of  business,  in  which  the  j)nblic, 
the  lawmaking  power,  leaves  the  interests  of  one  party  to  a  trans- 
action of  this  sort  solely  to  the  protection  of  the  self-interest  of  the 
other  party.  It  would  hardly  be  assumed  to  be  a  sound  basis  for 
the  ascertainment  and  administration  of  justice  anywhere  else,  and 
yet  that  is  the  proposition,  that  is  the  whole  argument — that  there 
can  be  no  wrong  on  account  of  the  common  interests  between  the  two — 
and  it  rests  upon  the  assumption  that  the  rightful  and  lawful  inter- 
ests of  one  party  to  the  transaction  can  be  left  for  its  protection  to 
the  self-interest  of  the  other  party.     Is  that  a  sound  proposition  ? 

Xow,  these  gentlemen,  when  they  have  been  asked  at  the  conclu- 
sion of  their  statements  if  they  have  any  suggestions  to  make  as  to 
amendments  to  the  law  in  the  nature  of  such  as  would  improve  it  have 
said,  ''Just  push  up  the  Interstate  Commerce  Commission  a  little  and 
make  them  force  us  to  ol^ey  the  law  as  it  is  now  and  things  will  be 
better."  Then  they  say  it  would  help  things  if  they  were  permitted 
under  a  law  to  agree  upon  rates  and  to  maintain  them,  and  that  there 
need  be  no  fear  of  an  abuse  of  that.  In  that  connection  there  has 
been  some  discussion  of  another  decision  by  the  Commission  in  respect 
to  rates  from  Chicago  and  Cincinnati  into  the  southeastern  territory. 
That  has  been  referred  to  as  an  example  of  Avhat  the  Commission 
would  do  if  it  had  the  power  to  reduce  rates  complained  of.  In  dis- 
cussing that  case  it  has  been  disclaimed,  as  I  understand  it,  by  Mr. 
Hines,  that  there  was  anything  shown  that  indicated  that  there  Avas  a 
combination  betvs-een  the  roads  or  a  division  of  territory  or  a  division 
of  the  business  whereby  the  rates  from  these  western  centers  to  south- 
eastern territory  were  kept  up  higher  than  they  would  have  been 
under  free  competition.  That,  briefly  stated,  is  what  I  understand 
to  be  his  contention.  In  that  respect  he  has  discussed  the  case  as  a 
case  of  discrimination  as  between  the  Middle  "West  and  the  East  for 
business  in  the  common  territory  of  the  South.  In  the  statement  of 
the  matter  he  has  referred  to  the  fact  that  there  was  no  pretense  or 
claim  that  the  rates  from  the  Ohio  Eiver  to  this  territory  were 
unreasonablv  high. 

Now,  I  have  that  case  before  me — just  what  the  Commission  did  do, 
or  what  it  undertook  to  do.  This  is  the  case  out  of  which  grew  the 
maximum-rate  decision  of  the  Supreme  Court.  I  will  not  take  the 
time  now  to  hunt  it  up,  but  m  this  there  is  a  specific  quotation  from 
the  complaint  of  the  Chicago  Board  of  Trade  that  these  rates  from 
the  Ohio  River  to  southeastern  territory — say  Atlanta,  as  a  center — 
were  unreasonably  high.  The  complaint  was  twofold.  The  Cin- 
cinnati freight  bureau  complained  that  the  rates  were  unjustly  and 
unequally  related  with  reference  to  eastern  rates  to  that  territory. 
The  Chicago  Board  of  Trade  complained  of  the  same  thing,  that  the 
rates  from  the  Ohio  Eiver  into  that  territory  were  unreasonably  high. 
Both  features  were  put  into  the  complaint  and  the  cases  were  con- 
solidated, heard,  and  handled  and  disposed  of  together,  and  the  Com- 


REGULATION    OF   RAILWAY  RATES.  85 

mission  distinctly  lielcl  that  it  could  not  undertake  to  make  the  rates 
on  these  roads  from  the  Ohio  River  into  southeastern  territory  a  per- 
centage of  or  base  them  in  any  way  upon  the  rates  from  eastern  cities 
to  that  territory,  they  being  independent  roads  and  independent 
lines,  and  one  road  should  not  fix  the  scale  of  rates  for  another 
territory. 

It  did  not  undertake  to  do  any  such  thing  as  that,  but  it  went  back 
to  the  complaint  that  tliey  were  unreasonably  high,  and  upon  that, 
and  that  alone,  the  order  Avas  based.  There  was  at  that  time  an  agree- 
ment between,  these  roads  binding  them  together  under  what  was 
known  as  the  Southern  Eailwai'  and  Steamship  Association.  I  have 
a.  copy  of  the  articles  of  agreement  that  were  in  force  at  the  time 
this  case  was  hied  and  heard.  I  do  not  desire  to  read  extracts  from 
that  at  length  and  take  your  time  here,  but  since  it  has  been  dis- 
claimed that  there  was  any  spirit  of  combination  that  affected  these 
rates,  and  that  there  was  nothing  but  the  freest  of  competition,  I 
think  it  is  incumbent  u]:!on  me  to  read  somewhat  from  that  agree- 
ment. 

Sec.  2.  For  the  mutual  protection  of  the  various  interests  and  for  the  purpose 
of  securing  the  greatest  amount  of  net  reyeu\ie  to  all  the  companies,  parties  to 
this  agreement,  it  is  agreed ■ 

Senator  Dolliver.  ^^'lliat  is  the  date  of  that? 

Mr.  Clements.  This  agreement  was  made  on  the  4th  day  of  Jan- 
uary, 1892.     [Continues  reading:] 

It  is  agreed  that  what  are  termed  "  western  lines  "  shall  protect  the  revenue 
derived  from  transportation  bj^  what  are  known  as  "  eastern  lines  "  with  the 
rates  as  fixed  by  this  association,  so  far  as  can  be  done  by  the  exaction  of  local 
rates,  and  that  eastern  lines  shall  in  a  like  manner  protect  like  revenue  of 
western  lines. 

Then  section  2  of  article  23  reads  as  follows : 

It  is  distinctly  understood  and  agreed  that  the  maintenance  of  rates  as  estab- 
lished under  the  rules  of  the  association  is  of  the  very  essence  of  this  agree- 
ment, and  the  parties  hereto  pledge  themselves  to  require  all  their  connections 
to  maintain  such  rates,  and  in  the  event  of  anj-  company  or  line  or  its  connec- 
tions not  members  of  the  association  failing  to  conform  to  this  'obligation,  the 
other  parties  in  interest  pledged  themselves  to  increase  their  proportion  of 
through  rates  sufficiently  to  protect  the  authorized  rate  whenever  required  by 
the  commission  to  do  so — 

That  meant  the  officer  of  this  association  and  commission.  [Con- 
tinues reading :] 

provided  that  in  no  case  shall  any  company  be  required  to  charge  more  than 
the  published  local  rates. 

Then  here  is  a  division  of  territorj^,  a  line  drawn  from  Buffalo 
by  way  of  Pittsburg.  Salamanca,  and  some  other  place  in  the  north, 
with  a  specific  stipulation  among  these  roads  in  this  signed  agree- 
ment that  traffic  originating  west  of  that  line  should  not  be  carried 
by  the  roads  in  the  P^ast  and  delivered  in  the  Southeast  west  of  a 
line  that  was  there  set  out,  from  Chattanooga  to  Montgomery  and 
other  places,  perhaps.  I  am  not  sure  about  the  line,  but  there  was  a 
line  in  the  South  and  one  in  the  North,  and  an  obligation  in  this 
agreement  that  the  eastern  roads  should  not  reach  over  and  take 


86 


EEGULATION    OF   KAILWAY   RATES. 


business  west  of  that  line  in  the  Xorth  for  delivery  in  the  South,  %Yest 
of  the  line  down  there,  and  that  the  western  roads  should  not  reach 
east  of  that  line  in  the  Xorth  for  business  east  of  that  other  line  in 
the  South.     It  is  all  set  out  here. 

Senator  Dolliver.  Now.  was  that  the  first  agreement? 

Mr.  Cle-ments.  No.  sir;  there  had  been  other  agreements  before. 

Senator  Dollrtir.  A^^iat  was  the  date  of  the  earliest  agreement  as 
to  that  division  of  southern  business  ? 

INIr.  Cle:ments.  I  can  not  tell.  Of  course  the  date  is  set  out  some- 
where in  this  report. 

Senator  Dolliver.  I  sot  an  impression  it  was  about  as  far  back  as 
1870. 

Mr.  Clements.  They  came  together  in  1870  or  1871.  That  is  set 
out  here.  Mr.  Peck  was  then  presiding  over  their  deliberations  when 
they  met. 

Senator  Dolliver.  Was  it  your  intention  to  have  the  report 
printed  ? 

Mr.  Clements.  I  would  be  glad  to  have  it  printed  here. 

Senator  Dolliver.  "We  will  be  glad  to  have  it  included. 

Mr.  CLE^rENTS.  Because  it  sets  forth  these  facts  just  as  they  are. 

The  ao;reement  referred  to  is  as  follows: 


Objects  of 
the   associa- 
tion. 


To  be  at- 
tained by  co- 
operation. 


The   Southern   Railnw.y   and   Steamship    Association — 

Agreement. 

This  agreement,  made  this  11th  day  of  January,  A.  D. 
1892,  by  the  parties  whose  signatures  are  hereto  attached, 
witnesseth  that — 

"Wliereas  the  establishment  and  maintenance  of  tariffs 
of  uniform  rates  to  prevent  unjust  discrimination  such 
as  necessarily  arises  from  the  irregular  and  fluctuating 
rates  which  ine\dtably  attend  the  separate  and  independ- 
ent action  of  transportation  lines  is  important  for  the 
protection  of  the  public:  and 

.  "Whereas  it  is  deemed  to  be  the  mutual  advantage  of  the 
public  and  the  transportation  companies  that  business  in 
which  they  have  a  common  interest  should  be  so  con- 
ducted as  to  secure  a  proper  correlation  of  rates,  such  as 
will  protect  the  interests  of  competing  markets  without 
unjust  discrimination  in  favor  of  or  against  any  city  or 
section;  and 

A^^iereas  these  objects  can  be  attained  by  the  coopera- 
tion on  the  part  of  the  various  transportation  lines  en- 
gaged in  the  traffic  of  the  territorv  south  of  the  Potomac 
and  Ohio  rivers  and  east  of  the  Mississippi  Eiver ;  and 

"\ATiereas  such  cooperation  is  absolutely  necessary  to  a 
strict  compliance  with  the  act  of  Congress  entitled  "An 
act  to  regulate  commerce :  " 

Now,  therefore,  in  order  to  secure  such  cooperation 
among  the  said  transportation  lines  and  to  provide  means 
for  the  prompt  adjustment  of  the  differences  which  may 
arise  between  them  by  placing  the  conduct  of  all  the 
traffic  common  to  two  or  more  companies  under  well-de- 


REGULATIOlSr    OF    RAILWAY    RATES.  87 

fined  rules  and  regulations  which  will  insure  the  mainte- 
nance of  rates,  it  is  mutually  agreed  as  follows : 

Article  First. 

Section   1.  The  association  herein  formed  shall  con- gp^^^^'i^jj*^^  ^^' 
tinue  to  be  styled  ''  The  Southern  Railway  and  Steam- 
ship Association."    , 

Article  Second. 

Section  1.  The  traffic  subject  to  this  agreement  shall  iimit''"or"nnes 
be  (a)  all  business  for  which  two  or  more  of  the  parties ^i^'c^  may  be 
hereto  compete,  having  origin  and  destination  within  the 
territory  of  this  association — that  is,  south  of  the  Vir- 
ginias and  south  of  the  Ohio  River  and  east  of  the  Mis- 
sissippi River,  and  {?))  all  traffic  between  territorj'  on  org,.^'"^^^^^'?^" 
north  of  the  southern  boundaries  of  the  Virginias  and  on  agreement. 
or  north  of  the  Ohio  River  and  west  of  the  Mississippi 
River,  and  the  territory  south  of  such  south  boundary  of 
the  Virginias  and  the  Ohio  River  and  east  of  the  Missis- 
sippi River,  except  that  traffic  to  or  from. a  local  point  on 
any  line  shall  be  considered  local  to  that  line,  and  so  far 
as  that  line  may  be  concerned  shall  not  be  subject  to  this 
agreement,  and*  further  except  that  traffic  between  points 
on  the  Ohio  and  ISIississippi  rivers  or  between  points  on 
the  Ohio  and  Mississij^pi  rivers  and  points  north  of  the 
Ohio  and  west  of  the  Mississippi  River  shall  not  be  sub- 
ject to  this  agreement. 

Sec.  2.  For  the  mutual  protection  of  the  various  inter-  nautuai'^piotec- 
ests  and  for  the  purpose  of  securing  the  greatest  amount  tion  to  eastern 
of  net  revenue  to  all  the  companies  parties  to  this  agree- unes^^^*^^" 
ment,  it  is  agreed  that  what  are  termed  western  lines  shall 
protect  the  revenue  derived  from  transportation  by  what 
are  known  as  eastern  lines,  under  the  rates  as  fixed  by 
this  association,  so  far  as  can  be  done  by  the  exaction  of 
local  rates,  and  that  eastern  lines  shall  in  like  manner 
protect  like  revenue  of  western  lines. 

Sec.  3.  That  a  line  from  BufTalo  through  Salamanca,  ^.e^tl^^'^gj.^?^ 
Pittsburg,  Wheeling,  and  Parkersburg,  to  Huntington,  <^?i''es  respec- 
W.  Va.,  be  made  the  dividing  line  between  eastern  and  '^^"^ 
Avestern    lines    for    the    territory    hereinafter    outlined. 
That  the  western  lines  shall  not  make  joint  rates  from 
points  east  of  that  line  for  any  points  east  of  a  line  drawn 
from    Chattanooga    through    Birmingham,    Selma,    and 
Montgomery  to  Pensacola. 

Sec.  4.  The  eastern  lines,  including  the  Richmond  and 
Danville  Railroad  via  Strasburg  or  points  east  of  Stras- 
burg,  and  the  East  Tennessee,  Virginia  and  Georgia  Rail- 
way via  Bristol,  shall  not  make  joint  rates  on  traffic  from 
points  w^est  of  that  line  (Buffalo,  etc.),  to  any  points  on 
or  west  of  a  line  drawn  from  Chattanooga  through 
Athens,  Augusta,  and  Macon  to  Liveoak,  Fla. 

Sec.  5.  The  traffic  from  Buffalo  through  Salamanca, 


88 


EEGULATION    OF    RAILWAY    EATES. 


Cooperation 
between  east- 
ern and  west- 
ern lines 
promised. 


Pittsburg,  "Wlieeling,  and  Piirkersburg  to  Huntington, 
W.  Va.,  and  points  on  that  line  to  and  east  of  Chatta- 
nooga, Calera,  and  Sehna  shall  be  carried  by  either  the 
eastern  or  western  lines  only  at  such  rates  as  may  be 
agreed  upon. 

Sec.  6.  It  is  understood  that  the  eastern  and  western 
lines  will  cooperate  in  the  enforcement  of  the  third  and 
fourth  section  of  this  second  article. 


Time  and 
place  for  hold 
ing  conven- 
tions. 


Business  of 
conventions. 


Article  Third. 

Section  1,  The  representatives  of  the  several  com- 
panies, members  of  the  association,  shall  meet  in  conven- 
tion annuall}^  on  the  second  "Wednesday  in  June,  in  the 
city  of  New  York,  or  at  such  other  place  as  ma}''  be  mu- 
tually agreed  upon,  and  special  meetings  may  be  called 
at  any  time  as  hereinafter  provided. 

Article  Fourth. 

Section  1.  The  business  to  be  transacted  in  general 
convention  shall  be  confined  to  the  election  of  officers,  fix- 
ing their  salaries,  the  representation  of  members  on  the 
executive  board,  and  the  adjustment  of  such  matters  as 
can  not  be  properly  determined  by  the  e'xecutive  board 
with  the  aid  of  the  board  of  arbitration.  Each  company 
a  member  of  the  association  shall  have  one  vote.  Two- 
thirds  of  the  whole  vote  of  the  members  present  shall  be 
required  to  make  the  action  of  the  convention  binding. 
Companies  members  of  the  association  may  be  represented 
in  the  convention  by  the  president,  vice-president,  gen- 
eral manager,  traffic  manager,  superintendent,  or  general 
freight  agent,  in  person  or  in  proxy,  provided  such  proxy 
presents  to  the  secretary  a  properly  attested  power  of 
attorney.  In  case  of  more  than  one  nomination  being 
made  for  any  office  the  election  shall  be  by  ballot. 


Officers  of 
association. 


Vacancy  in 
elective  office. 


Article  Fifth. 

Section  1.  The  following  officers  shall  be  elected  at  the 
annual  meeting,  and  shall  hold  their  office  until  the  next 
annual  meeting,  and  thereafter  until  their  successors  are 
elected.  A  president,  a  commissioner,  a  secretary,  and 
three  arbitrators. 

Sec.  2.  In  the  event  of  a  vacancy  occurring  in  any 
elective  office  the  president  may  fill  the  vacancy  until  a 
general  meeting  can  be  convened  to  elect  a  successor,  and 
such  meeting  shall  be  called  by  the  president  within 
twenty  days  after  the  vacancy  occurs. 

Article  Sixth. 

Lines  repre-       Section  1.  The  East  Tennessee.  Virginia  and  Georgia 
elecutive°  *  ^  Kailwav ;  Norfolk  and  Western  Railroad ;  Richmond  and 

board. 


EEGULATIOX    OF    RAILWAY   EATES.  89 

Danville  Eailroad;  Seaboard  and  Roanoke  Railroad; 
Central  Railroad  of  Georgia ;  Georgia  Railroad ;  Western 
and  Atlantic  Railroad;  Wilmington  and  Weldon  Rail- 
road; Atlanta  and  West  Point  Railroad,  and  Western 
Railway  of  Alabama;  Savannah,  Florida  and  Western 
Railway;  Old  Dominion  Steamship  Company;  Ocean 
Steamship  Company;  Merchants  and  Miners'  Transpor- 
tation Company;  Cape  Fear  and  Yadkin  Valley  Rail- 
way; Cincinnati,  New  Orleans  and  Texas  Pacific  Rail- 
way; Illinois  Central  Railroad;  Kansas  City,  Memphis 
and  Birmingham  Railroad;  Louisville,  New  Orleans  and 
Texas  Railway;  Louisville  and  Nashville  Railroad;  Mo- 
bile and  Ohio  Railroad;  Nashville,  Chattanooga  and  St. 
Louis  Railwaj^,  and  Newport  News  and  Mississippi  Val- 
ley Company  shall  each  designate  a  representative,  who 
shall  be  authorized  to  represent  them  in  matters  of  busi- 
ness with  the  association  or  its  members.  The  several 
representatives  so  designated  and  such  other  representa- 
tives of  members  of  the  association  as  may  be  designated 
by  the  executive  board  shall  constitute  the  executive 
board,  of  which  the  commissioner  shall  be  chairman.  If 
any  company  or  line  which  is  entitled  to  a  representative 
fails  to  appoint  one,  or  if  their  representatives  be  not 
present  at  any  meeting  of  the  executive  board,  such  com- 
pany or  line  shall  be  represented  by  the  commissioner. 

Article  Seventh. 


Section  1.  The  executive  board  shall  meet  at  the  call  executive^^  ^' 
of  the  commissioner  whenever  and  wherever  in  his  judg-  board, 
ment  it  is  necessary,  or  when  any  three  members  of  the 
board  request  it;  but  all  such  calls  must  state  the  object 
of  the  meeting  and  the  subject  to  be  acted  upon  by  the 
board.     All  absent  members  shall  be  represented  by  the  g^^'^jf  ^J^^^^^^J 
commissioner,  whose  duty  it  shall   be  to  make  himself  absent  mem- 
familiar  with  their  views  and  interests,  so  that  he  can  ^*^^"^' 
represent  them  properly;  and  votes  cast  b}^  the  commis- 
sioiier  for  absent  members,  at  any  meeting,  on  any  sub- 
ject stated  in  the  call,  shall  have  the  same  force  and  effect 
in  binding  such  members  as  if  cast  by  them  in  person. 
Other  subjects  than  those  mentioned  in  the  call  may  be 
considered  and  acted  upon  in  the  meeting  of  the  execu- 
tive board,  but  the  assent  of  the  absent  members  must  be 
obtained,  or  a  decision  of  the  board  of  arbitration,  before 
such  action  becomes  binding  upon  them.     The  executive  o/executlve  ° 
board  shall  have  jurisdiction  over  all  matters  relating  to  board. 
the  traffic  covered  by  this  agreement  but  shall  act  only 
by  unanimous  consent  of  all  its  members.     In  the  event 
of  failure  to  agree,  the  questions  at  issue  shall  be  settled 
by  the  board  of  arbitration  as  hereinafter  provided  for. 

Sec.  2.  The  principle  of  apportionment  of  business  sub- 
ject to  arbitration  shall  be  recognized  in  the  oj^eration 
of  the  association  so  far  as  this  can  be  lawfully  done. 


consent. 


90  KEGULATIOlsr    OF   EAILWAY   RATES. 

Article  Eighth. 

boaM^^may^  SECTION  1.  The  execiitive  board  shall  haA^e  the  right 

appoint  rate     at  their  discretion  to  appoint  rate  committees  and  other 

committees  ,  • ,  ,  ■,■,  J  Zi     •  i  j? 

and  other  sub-  Subcommittees,  either  ot  their  own  number  or  irom  among 
committees.  ^j-^g  officers  and  agents  of  the  companies  members  of  the 
association,  and  to  delegate  to  such  subcommittees  juris- 
diction over  such  matters  as  may  be  specially  committed 
ra4"comm?t-°  to  their  charge.  With  a  ^'iew  of  .a  proper  relative  adjust- 
^^^-  ment  of  all  rates,  and  especially  a  proper  relative  adjust- 

ment of  rate  on  similar  articles  from  the  East  and  West 
to  common  territory,  the  rate  committees  shall  have  sole 
authority  to  make  all  rates  and  classification  on  all  traffic 
covered  by  this  agreement,  subject  to  decision  of  the  com- 
missioner, the  executive  board,  or  board  of  arbitration,  as 
hereinafter  provided  in  case  such  rate  committees  can  not 
gCommis^ionei- agreg .  |3ut  if  the  rate  Committee  shall  fail  or  omit  to 
make  rates.      make  rates  on  any  traffic  covered  by  this  agTeement,  the 
commissioner  shall  have  authority  to  make  such  rates,  it 
being  the  intention  that  there  shall  be  properly  authenti- 
cated tariffs  of  rates  on  all  such  traffic, 
tee^s^sbau^act       ^*-^^"   ^'  Subcommittees  shall  only  act  by  unanimous 
by  unanimous   coiiseiit,  and  ill  failing  to  agree  the  questions  at  issue  may 
"""^  upon  demand  of  any  member,  be  referred  to  the  executive 

board  for  action  at  their  next  meeting,  or  the  votes  of 
members  of  the  executive  board  ma}^  be  taken  separately 
and  apart  b}^  correspondence,  and  such  questions  may  be 
submitted   direct  to  the  board   of  arbitration  when  so 
authorized  b}^  a  majority  of  the  executive  board. 
shX b?ex"*^^      Sec.  3.  The  commissioner  shall  be  ex-officio  chairman 
officio  chair-     of  Subcommittee,  and  as  such  shall  be  the  medium  of  corn- 
subcommittees  munication  between  the  subcommittees  and  the  executive 
res^nt'^absent'^  board.     Abseiit  members  of  subcommittees  shall  be  repre- 
members.  sented  by  the  commissioner,  as  in  case  of  absent  members 

shall  have  au- ot  the  exccutive  board.  During  the  interim  between  the 
cide 'tempo-  ^^  reference  of  any  matter  of  difference  from  a  subcommittee 
t^  n'^on"which  ^"  ^^^^  executive  board  and  the  final  determination  of  such 
•subcommittees  matter  the  commissioner,  if  he  deem  it  a  matter  requiring 
fail  to  agree,  pj^gmpt  actioii,  shall  have  authority  to  decide  it  tempo- 
rarily, and  his  decision  shall  be  binding  on  all  parties 
until  reversed  by  the  executive  board  or  by  arbitration. 

Article  Ninth. 
Executive  SECTION  1.  The  executive  board  shall  have  authority  to 

board  author-  i        c  j_-  j_      ±-  ^  i  i  i    j.-  j. 

ized  to  maijo     make  f  rom  time  to  time  such  rules  and  regulations,  not 
uiatfons!^  ''^="  inconsistent  with  this  agreement,  as  may  be  necessary  to 
secure  a  systematic  conduct  of  the  affairs  of  the  associa- 
tion and  obtain  the  objects  for  which  it  is  formed. 

Article  Tenth. 

Duties  of  Section  1.  The  president  shall  preside  over  all  general 

the  president,  j-^^gg^-^-^gg  ^f  ^j^g  association,  certify  to  the  record  of  such 


EEGULATIOX  OF  RAILWAY  EATES.  91 

meetings,  and  communicate  the  proceedings  to  all  mem- 
bers. He  shall  call  a  general  meeting  of  the  association 
whenever  he  is  requested  to  do  so  by  three  members  of  the 
executive  board,  or  whenever  it  is,  in  his  judgment,  neces- 
sary. 

Article  Eleventh. 

Sectiox  1.  The  board  of  arbitration  shall  hear  and  de-     Duties  of 
termine  all  questions  which  may  be  submitted  to  them  IrbitratfJn"' 
under  this  agreement  or  by  consent  of  the  parties,  and  the 
decisions  of  the  said  board  of  arbitration  shall  be  final 
and  conclusive. 

Article  Twelfth. 

Section  1.  The  secretary  shall  make  complete  and  accu-  Duties  of 
rate  records  of  the  proceedings  of  all  general  meetings  of  ^^^^  secretary. 
the  association,  the  originals  of  which  shall  be  preserved 
in  the  general  oiRce  of  the  association,  and  copies  fur- 
nished to  each  member.  He  shall  act  as  secretary  also  to 
the  board  of  arbitration,  to  the  executive  board,  and  to  all 
"committees  herein  provided  for,  and  preserve  similar  rec- 
ords of  their  proceedings,  and  perform  such  other  duty 
as  may  be  assigned  him  by  the  commissioner. 

Article  Thirteenth. 

Section  1.  The  commissioner  shall  be  the  chief  execu-  Duties  of  the 
tive  officer  of  the  association,  and  as  a  representative  of  commissioner. 
its  members,  both  severally  and  jointly,  shall  act  for  them 
in  all  matters  which  come  within  the  jurisdiction  of  the 
association  in  conformity  with  the  requirements  of  this 
contract  and  the  instructions  of  tlie  executive  board  and 
committees  herein  provided  for,  but  exercising  his  dis- 
cretion in  all  cases  which  are  not  provided  for  either  by 
this  agreement  or  by  the  executive  board  and  committees 
acting  under  its  authority  and  sanction.  When  directed 
by  the  executive  board  the  commissioner  shall  also  take 
charge  of  reports  and  claims  and  appoint  such  clerks 
and  claim  agents  as  may  be  necessary,  and  charge  up  the 
expense  to  the  roads  interested  in  the  business  on  an  equi- 
table basis,  managing  the  business  for  the  benefit  and  at 
the  cost  of  the  companies  interested.  He  shall  also  have 
authority  to  reduce  the  rates  when  necessary  to  meet  the 
competition  of  lines  or  roads  not  parties  to  this  agree- 
ment, and  he  may  at  the  same  time  make  corresponding 
reductions  from  other  points  from  which  relative  rates 
are  made.  He  shall  have  such  authority  over  the  traffic 
officers  and  their  subordinates  and  over  the  accounting 
departments  of  the  parties  hereto  as  may  be  necessary  to 
enforce  the  terms  of  this  contract  relative  to  the  mainte- 
nance of  rates,  and  to  require  information  relating  to  the 
traffic  to  be  furnished  to  him  in  such  form  or  manner  as 


92 


REGUIATION    OF    RAILWAY   RATES. 


Accounts    of 
traffic  to  be 
kept  by  com- 
missioner. 


he  may  deem  necessary.  He  shall  have  access  either  in 
person  or  by  deputy  to  the  books,  papers,  correspondence, 
etc.,  of  any  of  the  oflicers,  agents,  or  employees  of  the 
parties  hereto  that  relate  to  the  freight  traffic  covered  by 
this  agreement. 

Article  Fourteenth. 

Section  1.  The  commissioner  shall  keep  such  accounts 
of  the  traffic  covered  hj  this  agreement  and  make  such 
reports  of  the  same  as  may  be  directed  by  the  executive 
board. 

Article  Fifteenth. 


Disburse- 
ments of 
funds. 


Section  1.  All  disbursements  of  the  funds  of  the  asso- 
ciation shall  be  made  by  the  commissioner,  who  shall  give 
bond,  with  security,  in  such  amount  as  shall  be  satisfac- 
tory to  the  executive  board,  that  he  will  duly  and  prop- 
erly account  for  all  moneys  of  the  association  or  belong- 
ing to  members  thereof,  which  may  in  any  manner  come 
into  his  possession  or  under  his  control.  No  payments 
shall  be  made  except  on  properly  receipted  vouchers, 
which  shall  be  held  subject  to  inspection  by  the  executive 
board  or  such  person  or  persons  as  may  be  appointed  by 
them  for  that  purpose. 


Article  Sixteenth. 

Deposits  to  Section  1.  In  order  to  provide  for  the  promiDt  pa5'ment 
^^^  ■  of  any  fines  that  ma}^  be  assessed  against  any  member  of 
this  association  for  violating  rules,  each  company  shall 
deposit  with  the  commissioner  an  amount  equivalent  to  $5 
for  each  mile  of  the  road  operated  by  said  company  under 
the  provisions  of  this  agreement,  or,  in  case  where  a  com- 
pany operates  a  water  line,  $5  for  each  mile  allowed  as  a 
prorating  distance  in  the  decision  of  through  rates,  pro- 
vided such  amounts  shall  not  exceed  in  the  aggregate  the 
sum  of  $5,000  for  any  one  company ;  but  in  all  cases  where 
fines  are  assessed  the  commissioner  is  hereby  authorized 
to  draw  at  sight  on  the  parties  against  whom  such  fines 
are  assessed  for  the  full  amount  of  said  fines,  and  each 
company  party  to  this  agreement  hereby  binds  himself  to 
promptly  pay  such  drafts,  it  being  the  intent  and  mean- 
ing of  this  section  that  the  deposit  herein  provided  for 
shall  not  be  diminished  by  reason  of  the  payment  of  any 
fines  that  may  be  assessed  against  a  company  making  such 
deposit. 

Article  Seventeenth. 

•commissioner  Section  1.  The  Commissioner  shall  be  furnished  with 
n?shld^^ith  copies  of  all  manifests  for  traffic  covered  by  this  agree- 
festf  °*  ™^°'"ment,  such  copies  to  be  forwarded  at  the  time  the  ship- 


EEGULATION    OF    RAILWAY    RATES.  98 

ments  to  which  they  appertain  are  made,  and  shall  show 
the  original  shipping  point  and  through  rates,  and  also 
the  divisions  thereof,  so  far  as  such  divisions  are  con- 
trolled by  this  agreement,  and  abstracts  of  such  manifests 
shall  be  furnished  to  the  commissioner  at  the  expiration 
of  each  month ;  but  it  is  understood  that  the  members  of 
the  association  shall  not  have  access  to  any  of  such  mani- 
fests or  be  furnished  with  the  names  of  consignors  or  con- 
signees. The  tonnage  books  of  every  company  in  the  asso- 
ciation shall  be  open  at  all  times  to  the  inspection  of  the 
commissioner  or  such  agent  as  he  may  from  time  to  time 
appoint,  for  the  purpose  of  enabling  him  to  get  a  complete 
record  of  all  traffic  covered  by  this  agreement. 

Article  Eighteenth. 

Section  1.  Copies  of  all  rates  that  may  be  from  time  to     copies  of 
time  agreed  upon  or  fixed  in  the  manner  provided  shall  gent^  to°  offi- 
be  furnished  promptlj^  to  the  auditors  and  other  officers  ^er|  "i"  "^^^- 
of  the  parties  to  this  contract,  and  they  shall  see  that  the 
rates  are  enforced  in  conformity  therewith  and  that  no 
•variations   are  made   from   such  rates  or  manifests  by 
voucher  or  otherwise. 

Article  Nineteenth. 

Section  1.  That  all-rail  rates  to  and  from  the  ports  of  ,.j^4s"'"^" 
Boston,  Providence,  New  York,  Philadelphia,  and  Balti- 
m_ore  to  points  within  the  territory  as  covered  by  this 
agreement  shall  be  higher  than  the  rates  by  water  or  com- 
bined water  and  rail  lines  by  the  present  differentials,  as 
established  by  the  board  of  arbitration  July  19,  1889,  and 
subject  to  the  Southern  Railway  and  Steamship  Associa- 
tion classification. 

Sec.  2.  Water  lines  or  combined  water  and  rail  lines     water  lines 
may  insure  against  marine  risks  by  issuing  insured  bills  ^!ate?°and^*^aii 
of  *^lading  between   the   above-named   ports   and   points  J^'^j'^es  a'lJlfnir 
within  the  territory  covered  by  this  agreement,  they  giv- marine"  risks. 
ing  two  weeks'  written  notice  to  the  commissioner,  nam- 
ing the  points  to  which  the}^  will  issue  insured  bills  of 
lading. 

Sec.  3.  No  water  line  or  combined  water  and  rail  line  ,5^^^"^.^^^/ ^^^^^ 
shall  assume  the  cost  of  insurance  against  marine  risk  in  assumed  only 
any  other  manner  than  herein  provided  for,  viz,  by  the  Insm-ld' wa's" 
issue  of  insured  bills  of  lading.      It  is,  however,   dis-  "*  lading. 
tinctly  understood  and  agreed  that  no  reduction  of  the 
established  tariff  rates,  rebates,  or  consideration  of  any 
kind  shall  be  given  or  offered  to  influence  shippers  or  to 
secure  their  preference  for  any  road  or  line. 

Sec.  4.  The  above-named  differentials  as  between  all-  feitntlais  sillu 
rail  lines  and  water  or  combined  water  and  rail  lines  shall  -^^IJ^l  b^'^afm 
not  be  changed  except  by  arbitration,  which  may  at  any  tiation.  ^ 
time  be  called  for  b}^  any  party  to  this  agreement. 

Sec.  5.  The  present  insurance  clause  shall  remain  in 


94 


EEGULATIOISr    OF    RAILWAY    BATES. 


force  until  the  business  shall  have  been  apportioned  and 
after  such  apportionment  has  been  made  effective,  then 
the  insurance  clause  as  amended  by  the  majorit}^  report 
of  the  committee  on  revision  shall  be  substituted  there- 
for. 

Article  Twentieth. 

frMa*fntei-ior"^  Section  1.  The  parties  to  this  agreement  who  control 
eastern  points,  all-rail  lines  through  Alexandria,  Hagerstown,  Rich- 
mond, or  Norfolk  agree  to  protect  the  water  lines  or  com- 
bined water  and  rail  lines  upon  the  basis  of  the  above- 
named  differentials,  or  such  other  differentials  as  may  be 
fixed  by  arbitration  in  making  rates  between  points  in  the 
territory  covered  b}^  this  agreement  and  all  interior  points 
in  the  Northern  and  Eastern  States  east  of  the  territorial 
line  above  mentioned. 

Sec.  2.  It  is  agreed  that  rates  made  to  points  reached 
by  lines  via  Cincinnati  or  Louisville  not  members  of  this 
association  niSij  become  the  rates  of  all  association  lines. 

Sec.  3.  It  is  also  agreed  that  in  cases  where  a  combina- 
tion of  locals  to  and  from  interior  points  by  rail  lines 
make  lower  totals  than  the  established  water  lines  port 
rates  plus  differentials,  the  rate  may  be  by  all  lines  the 
lowest  combination,  but  shall  not  be  less  than  such  com- 
bination. 

Sec.  4.  In  all  cases  changes  of  rates  made  under  above 
provisions  shall  be  made  by  the  rate  committees  or  the 
commissioner,  who  shall  promptly  notify  all  parties  in- 
terested. 

Article  Twenty-first. 


Reports  of 
tonnage  and 
revenue  to 
commissioner. 


Section  1.  The  executive  board  shall  organize  such  a 
system  for  the  rendition  of  tonnage  and  revenue  reports 
of  traffic  covered  b}^  this  agreement  as  shall  enable  the 
commissioner  to  be  at  all  times  fuUj'^  informed  of  the 
movements  thereof  and  the  observance  of  rates  estab- 
lished therefor,  in  order  that  he  may  detect  promptly  any 
violation  of  rates  and  keep  each  company  or  line  in- 
formed of  the  action  of  the  other  companies  or  lines. 
For  these  purposes  the  executive  board  at  their  discre- 
tion may  appoint  agents  to  examine  the  books  of  the 
members  of  the  association  and  inspectors  of  the  weights 
and  classifications,  who  shall  at  all  times  have  access  to 
and  be  permitted  to  examine  goods.  Any  losses  or  dam- 
ages resulting  to  initial  carrier  from  the  opening  of 
packages  by  inspectors  shall  be  prorated  on  the  basis  of 
revenue.  The  expense  of  such  agents  and  inspectors  shall 
be  distributed  among  the  members  as  hereinafter  set 
forth.  Tonnage  and  revenue  statements  shall  be  ren- 
dered monthly  to  each  member  of  the  association,  and 
also  annually  on  the  30th  day  of  April  in  a  report  to  be 
made  by  the  commissioner  at  the  expiration  of  each  year 


REGULATIOISr    OF    RAILWAY    RATES.  95 

and  distributed  to  the  members  at  least  two  weeks  before 
the  annual  meeting. 

Article  Twenty-second. 

Section  1,  All  measures  necessary  to  carry  out  the  j-eferred^to^^ 
purpose  of  this  agreement  shall  be  taken  jointly  by  the  arbitration, 
parties  hereto ;  and  should  any  question  arise  upon  which 
they  can  not  agree  in  relation  to  the  terms  of  this  con- 
tract, or  to  any  matter  arising  thereunder,  it  shall  be 
decided  by  arbitration  as  herein  provided,  it  being  one  of 
the  fundamental  principles  of  this  contract  that  no  party 
shall  take  separate  action  in  any  matter  affecting  the 
interest  of  one  or  more  of  the  other  parties  contrary  to 
the  spirit  and  intent  of  this  contract,  and  that  all  differ- 
ences relating  to  the  establishment,  adjustment,  and  main- 
tenance of  rates  upon  the  traffic  covered  by  this  contract 
shall  be  adjusted  by  arbitration. 

Artici;E  Twenty-third. 

Section  1.  Wlienever  rates  have  been  fixed  by  the  rate 
committees,  the  commissioner,  the  executive  board,  or  bj^ 
arbitration  there  shall  be  no  reduction  from  such  rates 
without  the  consent  of  the  commissioner.  No  member  of 
the  association  shall  reduce  such  rates,  directly  or  indi- 
rectly, by  any  special  rate,  rebate,  or  drawback,  or  by 
payment  of  commissions,  or  by  reductions  on  manifests, 
or  b}^  combinations  of  local  rates,  or  by  rebilling,  or  by 
underbilling  weights,  or  by  any  consideration  in  the  way 
of  free  transportation,  or  in  any  manner,  or  by  any  device 
whatsoever. 

Sec.  2.  It  is  distinctly  understood  and  agreed  that  the  vance*'propor-^' 
maintenance  of  rates  as  established  under  the  rules  of  tions  in  case 
the  association  is  of  the  very  essence  of  this  agreement,  ^ 
and  the  parties  hereto  pledge  themselves  to  require  all 
their  connections  to  maintain  such  rates,  and  in  the  event 
of  any  company  or  line,  or  its  connections,  not  members 
of  the  association,  failing  to  conform  to  this  obligation, 
the  other  parties  in  interest  pledge  themselves  to  increase 
their  proportions  of  through  rates  sufficiently  to  protect 
the  authorized  rate  whene^^er  required  b}"  the  commis- 
sioner to  do  so :  Provided,  That  in  no  case  shall  any  com- 
pany be  required  to  charge  more  than  its  published  local 
rates. 

Sec.  3.  "Wlienever  the  commissioner  shall  have  reason  ^^'^'ij^'^.^'n^^f^ed 
to  believe  that  the  rates  established  under  the  rules  of  the  to -board  of 
association  are  not  being  fully  maintained  by  any  line  or^'  '  '^  '^°' 
company,  member  of  the  association,  it  shall  be  his  duty 
to  make  a  full  investigation  of  the  facts  in  such  case,  and 
if  in  his  judgment  there  has  been  any  violation  of  this 
agreement  on  the  part  of  any  member  or  members  of  this 
association  which  he  can  uot  properly  correct,  he  shall 
submit  the  evidence  in  such  case  to  the  board  of  arbitra- 


96  EEGULATION    OF    RAILWAY   RATES. 

tion;  and  if  the  board  of  arbitration  shall  find,  after  a 
full  hearing  of  the  case,  that  any  member  is  guilty  of 
violating  this  agreement,  it  shall  impose  such  penalties 
therefor  as  it  may  deem  proper„  and  necessary  to  secure 
the  maintenance  of  the  rules  of  this  association.  The 
commissioner  shall  enforce  such  penalties,  making  use,  if 
necessary,  of  the  fund  provided  for  this  purpose.  Any 
surplus  over  and  above  the  amount  that  maj''  be  awarded 
by  the  board  of  arbitration  to  indfannify  any  members 
for  losses  sustained  shall  be  applied  to  the  payment  of 
the  expenses  of  the  association. 
Board  of  Sec.  4.  The  board  of  arbitration  shall  from  time  to 

makelts^^uils.  time  make  or  amend  rules  of  procedure  for  the  trial  of 
such  cases,  and  the  submission  of  arguments  in  cases 
referred  to  it  for  decision,  as  it  may  deem  proper. 

Article  Taventy-foitrth. 

Sectiox  1.  In  order  to  defray  the  expense  of  the  asso- 
ciation, there  shall  be  first  assessed  annually  on  each  mem- 
ber thereof  a  tax  of  $300.  which  shall  be  applied  to  pay- 
ing salaries  of  general  officers  and  toward  general 
expenses,  such  as  office  rent,  printing,  etc. ;  and  such  addi- 
tional amount  may  be  assessed  on  members  pro  rata, 
according  to  their  gross  revenue  derived  from  the  traffic 
covered  by  this  agreement,  as  may  be  necessary  to  meet 
these  and  all  other  expenses  of  the  association. 

Article  Taaenty-eifth. 

Duration  of       Sectiox  1.  This  coutract  takcs  effect  the  14th  day  of 
agreement.        j.^i^^^f^.y,  1892,  and  shall  terminate  on  the  31st  day  of 
Julv.  1892,  and  the  fiscal  year  of  the  association  shall 
termniate  on  the  30th  day  of  April,  1892. 

The  Oixcinnati,  New  Orleans  and  Texas  Pacitic  Railway, 
By  Hexry  Fink,  Vice-President. 

Illinois  Central  Railroad, 
By  J.  T.  Harahan,  Second  Vice-President. 

Louisville,  Xew  Orleans  and  Texas  Railway, 
By  E.  AV.  How,  Traffic  Manager. 

Mobile  and  Ohio  Railroad  Co:NrPANY. 
By  J.  C.  Clarive,  President. 

^Louisville  and  Nashville  Railroad  Company, 
By  S.  R.  Knott,  First  Vice-President. 

'^Me:mphts  and  Charleston  Railroad  Company, 
By  Henry  Fink,  Vice-President. 

Alabama  Great  Southern  Railroad  Company, 
By  Henry  Fink,  Vice-President. 

Georgia  Pacific  Railroad, 
By  Sol.  Haas,  Traffic  Manager. 

'East  Tennessee,  Virginia  and  Georgia  Railway  Company, 
By  Henry  Fink,  Vice-President. 

Old  Dominion  Steamship  Co:mpany, 
By  W.  L.  GuiLLAUDEU,  Traffic  Manager. 


regulation  of  railway  rates.  97 

Merchants'  and  Miners'  Transportation  Company, 
By  J.  C.  Whitney,  TraffiG  Manager. 

Seaboard  and  Roanoke  Railroad  Company, 
By  O.  V.  Smith,  Traffic  Manager. 

Norfolk  and  Western  Railroad  Company, 
By  Charles  G.  Eddy,  Vice-President. 

Richmond  and  Danville  Railroad  Company, 

Central  Railroad  of  Georgia,  including  Port  Royal  and 
Augusta, 
By  Sol.  Haas,  Traffic  Manager. 

The    Atlanta    and    West    Point    Railroad    Company    and 
Western  Railway  or  Alabama, 
By  C.  H.  Phinizy,  President. 

The  Georgia  Railroad, 
By  C.  H.  Phinizy,  Acting  General  Manager. 

The  Wilmington  and  WEiiDON  Railroad  Company, 
B}^  H.  Walters,  Y ice-President. 

The  Savannah,  Florida  and  Western  Railway  Company, 
By  H.  S.  PIaines,  Vice-President. 

Cape  Fear  and  Yadkin  Valley  Railway  Company, 
By  J.  W.  Frye,  General  Manager. 

The  Baltimore  Steam  Packet  Company, 
By  R.  L.  Poor,  General  Freight  Agent. 

The  Ocean  Steamship  Company  of  Savannah, 
By  G.  M.  Sorrel,  Manager. 

The    Newport    News    and    Mississippi    Valley    Company 
(W.  D.), 
By  E.  W.  How,  Traffic  Manager. 

Georgia  Southern  and  Florida  Railroad, 
By  A.  C.  Knapp,  Ti^affic  Manager. 

Nashville,    Chattanooga    and    St.    Louis    Railway    and 
Western  and  Atlantic  Railroad, 
By  J.  W.  Thomas,  President. 

Kansas  City,  Memphis  and  Birmingham  Railroad  Company, 
By  Geo.  H.  Nettleton,  President. 

The    Baltimore,    Chesapeake    and    Richmond    Steamboat 
Company, 
Py  Reuben  Foster,  Vice-President. 

Senator  Newlands.  What  is  the  title  of  those  articles  which  you 
read? 

Mr.  Clements.  The  Southern  Railway  and  Steamship  Association 
agreement,  dated  the  14th  day  of  January,  1892.  It  was  openly 
stated  in  the  earlier  part  of  these  conferences,  which  is  a  part  of  the 
history  of  this  whole  transaction,  these  agreements  were  supposed  to 
be  made  once  a  year  and  rencAved  every  j^ear.  When  the  first  one  was 
made  in  specific  form  I  do  not  know.  There  was  no  law  then  against 
pooling  and  these  things,  and  subsequent  agreements  to  this,  one  or 
two,  had  penalties,  fines,  and  forfeitures  to  be  paid  in.  They  were 
to  be  paid  in  in  advance,  so  that  if  any  road  violated  any  of  these 
rules  there  would  be  money  in  the  treasury  belonging  to  it,  so  that 
the  commissioner  could  apply  it  to  the  penalty  and  as  a  fine,  so  as  to 

741a— 05 7 


98  REGULATION    OF    RAILWAY   RATES. 

enforce  the  observance  of  these  rules  and  reguhitions.  It  was  clearly 
to  distribute  the  business.  Mr.  Peck,  who  was  presiding  over  the 
early  conference,  out  of  which  all  this  business  grew,  said  in  sub- 
stance that  there  ought  to  be  about  10  cents  greater  rate  on  the  man- 
ufactured goods  from  the  West  and  about  the  same  difference,  per- 
haps, on  other  heavier  and  coarser  goods  that  were  then  common  and 
peculiar  to  the  West.  There  was  no  disguising  the  fact  that  the  rates 
were  made  relatiA'ely  between  these  eastern  roads  and  western  roads 
for  the  purpose  of  getting  the  greatest  amount  of  net  revenue  to  the 
parties  to  this  agreement  out  of  the  business,  and  to  that  end  these 
lines  were  made  so  that  the  eastern  goods  would  be  carried  into  tlie 
South  by  western  roads  and  western  goods  into  the  South  by  eastern 
roads.  Now,  Mr.  Hines  said  the  other  day  that  was  done  hi  order  to 
avoid  this  absurd  movement  away  around  from  the  West  to  the 
Atlantic  Ocean  and  then  down  South. 

Senator  Dolliver.  That  was  Mr.  Kipley,  I  think,  who  made  some 
such  statement  as  that. 

Mr.  Clements.  That  is  only  another  way  of  saying  it  was  to 
bridle  and  limit  the  competition  between  these  carriers;  that  there 
must  have  been  some  roads  that  were  willing  to  do  that  in  order  to 
get  a  part  of  the  business.  Otherwise  it  would  not  have  been  nec- 
essary to  bridle  them  and  keep  them  from  it.     That  is  self-evident. 

Now,  something  was  said  a  few  days  ngo  here  in  an  incidental 
way  of  the  acquisition  of  the  Louisville  and  Nashville  road  b}'  the 
Atlantic  Coast  Line.  It  was  said  that  it  was  not  contrary  to  the 
policy  of  an}'  law  because  they  were  not  in  any  sense  competitive; 
that  they  were  too  far  apart  and  served  different  territories.  And 
yet  there  was  this  very  rule  that  it  was  found  necessary  to  put  in 
here  to  keep  the  eastern  roads  from  trying  to  participate  in  part  of 
the  business  of  the  West,  and  that  was  peculiar  to  the  West,  to  carr}'^ 
it  around  that  way,  and  for  what  purpose? 

All  this  was  for  the  purpose  of  enabling  the  parties  to  get  the 
greatest  amount  of  net  revenue  out  of  the  business.  They  must  not 
cut  one  another's  throat.  Roundabout  roads  must  not  do  such  things 
as  that,  as  it  has  a  tendency  to  reduce  rates.  They  went  to  the  extent 
of  requiring  parties  to  this  agreement  to  exact  their  full  locals 
against  connections  which  did  not  adhere  to  all  of  these  rules.  Not 
that  the  connection  be  allowed  to  do  as  it  pleased  and  take  less  than 
a  local,  but  it  must  not  be  allowed  to  do  it  under  these  bristling  pen- 
alties to  prevent  that  desired  movement  and  distribution  of  the  busi- 
ness and  lowering  of  rates,  which  would  prevent  the  obtaining  of 
the  greatest  net  revenue  to  the  parties.  Now,  inasmuch  as  this  has 
been  discussed,  although  it  was  decided  distinctly  on  one  allegation 
which  was  investigated  that  the  rates  were  unreasonably  high  and 
went  off  on  that,  it  has  been  discussed  here  as  a  matter  of  comparative 
rates  from  the  East  and  from  the  West  into  that  territory,  and  some 
interesting  testimony  was  presented  in  that  case  by  letters  and  by 
commissions  of  some  of  the  railroads.  Mr.  S.  S.  Knott,  then  traffic 
manager  of  the  Louisville  and  Nashville  Railroad,  in  a  letter  to  Mr. 
J.  J.  Grammar,  dated  April  14,  1890,  wrote  that — 

While  the  adjustments  may  be  unfair,  as  we  think  it  is — 

He  was  then  talking  about  the  existing  adjustments — 

yet  it  cau  hardly  be  said  to  be  arbitx-ary  or  wholly  unreasonable — 


REGULATION    OF    RAILWAY    RATES.  99 

And  that  his  company,  together  with  other  lines  interested  in 
western  traffic,  who  Avere  members  of  the  Southern  Railway  and 
Steamship  Association,  urged  a  modification  of  the  difference  between 
eastern  and  Avestern  rates,  and  succeeded  in  having  the  matter 
brought  under  the  rules  of  the  association  and  before  the  board  of 
arbitration. 

They  had  a  board  of  arbitration  to  settle  these  matters,  and  the 
question  was  fully  presented  from  both  sides  of  the  case,  and  the 
decision  of  the  board  at  the  time — May,  1888 — Avas  that  the  best  pro- 
tection of  all  interests  did  not  AA'arrant  the  change  in  the  adjustment 
of  rates',  AA'hich  they,  in  common  AA'ith  the  other  AA^estern  lines,  had  re- 
quested— that  is,  changing  the  adjustment  from  the  Ohio  Ili\'er  points 
and  points  north,  as  compared  AA'ith  the  rates  from  the  eastern  cities. 
Mr.  B.  E.  Hand,  assistant  general  freight  agent  of  the  Michigan 
Central  Railroad,  stated  that  he  had  made  repeated  efforts  Avith  rail- 
roads operating  in  southern  territory  for  a  reduction  of  rates  on 
manufactures  from  the  West  to  the  Southeast.  Mr.  J.  J.  Graimner, 
of  the  Central  Traffic  Association  committee  on  relations  AAdth  south- 
ern roads,  in  a  letter  to  N.  J.  Eickelhardt,  of  April  2,  1890,  AAdio  was 
at  the  head  of  this  Chicago  freight  bureau  at  that  time,  said : 

All  our  efforts  thus  far  have  been  unavailing  to  more  justly  equalize  the  rate. 
You  doubtless  understand  the  southern  road  rates  from  the  Ohio  River  are 
arbitrary,  their  rates  being  from  50  to  100  per  cent  greater  per  mile  than  on  the 
lines  north  of  the  river  on  similar  trattic. 

In  a  letter  dated  April  8,  1890,  to  Mr.  S.  S.  Knott,  he  says : 

The  injustice  of  the  present  basis  of  rates  from  the  Ohio  River  must  of 
necessity  be  apparent. 

But  noAT,  these  Avere  railroad  men — traffic  men — men  Avho  have  a 
j)recise  knoAvledge  of  what  is  right  and  what  can  be  done  and  Avhat 
ought  to  be  done.  These  were  their  letters.  They  were  bound  up — 
some  of  them,  not  all  of  them — but  Mr.  Knott  represented  the  Louis- 
ville and  NasliAdlle  Railroad,  and  they  were  bound  by  this  agree- 
ment, and  Avhen  they  Avanted  to  rearrange  this  adjustment  they  had 
to  bring  it  to  the  arbitration  board  made  by  that  agreement,  and  then 
thbj  had  to  abide  by  what  it  did. 

Senator  Kean.  That  man  Eickelhardt  was  not  a  traffic  manager, 
AY  as  he  ? 

Mr.  Clements.  He  was  the  traffic  manager  of  the  freight  bureau. 
And  then  he  represented  the  shipping  interests.  That  was  Avhat  they 
called  them  at  the  time.  He  was  at  the  head  of  Avhat  they  called 
''  the  freight  bureau  of  Chicago,"  which  was  a  body  representing 
the  shippers — the  same  board  of  shippei;?  that  made  this  complaint. 
I  think  this  agreement  by  its  terms  fully  ansAvers  all  that  has  been 
said  here  about  there  being  no  adjustment  of  rates  there  on  any  basis 
of  free  competition  or  on  any  basis  Avhich  did  not  undertake  to  dis- 
tribute that  traffic.  The  waj^  it  was  done  was  with  the  rates  on  the 
classes.  The  classes  1,  2,  3,  4,  5,  and  6  of  the  official  classification 
territory, .  which  applied  from  the  eastern  territory  to  the  South, 
Avere  made  comparativel}^  Ioav  Avith  respect  to  the  same  classes  from 
Cincinnati  and  Chicago  to  the  same  southeastern  territory.  They 
did  not  say  anything  about  manufactured  goods,  the  rates  being 
adjusted  with  reference  to  manufactured  goods  in  one  part  of  the 
territory,  but  the  class  tariffs  were  made  lower  relatiA'ely  from  the 


100  KEGULATION   OF   RAILWAY  RATES. 

East  than  from  the  West,  and  it  happened  that  these  high-class 
goods  imported  and  manufactured  in  this  country  fall  into  the 
classes.  Now,  a  good  deal  has  been  said  here  and  we  have  been 
drawn  into  a  discussion  of  some  actual  cases  he  then  handled.  One 
was  a  recent  case,  namely,  the  Lumber  Case. 

Senator  Dolliver.  Did  you  intend  to  return  to  this  Maximum 
Rate  Case  any  further? 

Mr.  Clements.  Perhaps  not,  unless  there  is  some  question  about  it. 

Senator  Dolliver.  If  the  chairman  will  permit  me.  I  would  like  to 
ask  you  a  few  questions  about  that,  referring  to  Mr.  Hines's  testimony. 

Mr.  Clements.  Yes ;    I  will  be  glad  to  answer. 

Senator  Dolliver.  The  impression  which  Mr.  Hines  sought  to 
make,  I  think,  was  that  the  order  in  that  case  was  so  comprehensive 
as  to  practically  fix  innumerable  rates,  and  in  its  practical  operation 
to  disturb  about  as  many  commercial  conditions  north  of  the  Ohio 
River  and  south  as  it  settled.  For  instance,  I  recollect  that  he  sug- 
gested that  Chicago  and  Cincinnati  went  in  together  in  a  fight  against 
New  York,  and  that  by  the  order  of  the  Commission  Cincinnati 
won  out  as  against  New  York,  but  lost  vastly  by  the  order  of  the 
Commission  on  account  of  changes  made  in  the  Chicago  rate, 
although  no  testimony  had  been  taken,  and  there  was  no  controversy 
between  Cincinnati  and  Chicago.  Also  that  two  cities  in  Georgia, 
situated,  I  think,  as  Atlanta  and  Rome  are,  which  for  many  years 
have  had  a  perfectly  satisfactory  adjustment  of  rates  from  the  Ohio 
River,  found  themselves  at  the  end  of  that  controversy,  to  which  they 
were  not  a  party,  disturbed  in  their  adjustment,  Rome  getting  a 
differential  of  7  cents  against  Atlanta. 

Mr.  Cleiments.  How^  much? 

Senator  Dolliver.  I  think  he  said  7  cents  in  a  hundred;  and  he 
gave  that  as  onh^  one  of  several  disturbances  of  fixed  commercial  re- 
lations, which,  had  the  order  ever  gone  into  effect,  would  have  cre- 
ated an  insurrection  down  in  that  section  of  the  country. 

Mr.  Clements.  I  am  glad,  Senator,  that  you  asked  me  that  ques- 
tion, because  I  had  intended  to  refer  to  that  argument,  and  for  the 
moment  I  had  passed  away  from  it. 

Senator  Dolliver.  I  confess,  Judge  Clements,  I  was  more  inter- 
ested in  the  account  of  how  far-reaching  the  order  was  in  that  case 
and  how  far  it  justifies  the  complaint  which  has  been  lodged  here 
that  this  power  of  which  we  are  considering  the  propriety  would,  in 
fact,  be  the  power  of  general  fixing  of  the  rates.  In  other  words, 
that  the  complaint  could  be  so  enlarged  as  to  completely  cover  the 
whole  commercial  territory. 

Mr.  Cle:^ients.  The  order  in  that  case  did  undertake  to  deal  with 
all  classes  of  rates  from  Cincinnati  and  Ohio  River  points  to  the 
basing  point  in  this  southeastern  territory,  which  was  covered  by 
the  complaint,  including  Atlanta,  Rome,  Anderson,  and  several  other 
places,  and  including  Meridian,  Miss.  The  complaint  was  that  these 
rates  were  unreasonably  high  and  that  they  were  unduly  favorable 
on  the  class  goods  to  the  eastern  roads.  We  disposed  of-  that  last 
question,  as  I  have  told  you,  upon  the  idea  that  the  western  roads 
should  not  have  their  rates  made  by  the  eastern  roads;  that  while 
you  could  deal  with  lines  that  made  up  one  system,  the  differences 
which  made  discriminations  that  way,  there  was  no  power  in  the 


EEGULATION    OF    RAILWAY   RATES.  101 

Commission  to  say  that  because  a  road  leading  from  the  East  into 
the  Southeast  wanted  to  make  a  low  rate,  therefore  a  road  leading 
from  Chicago  into  some  point  in  the  South,  wholly  independent, 
should  make  a  rate  based  upon  that,  except  as  a  comparison  might 
afford  some  basis  for  arriving  at  what  was  a  reasonable  rate.  The 
complaint  was,  as  3'ou  have  stated,  from  these  Ohio  River  points, 
particularly  Cincinnati,  to  southeastern  territory.  It  was  only  from 
Cincinnati,  but  of  course  it  affected  the  Ohio  Kiver  points  and  others 
as  Avell. 

The  Chairman.  The  Commission's  rates  in  that  case  were  lower 
from  Rome  than  from  Atlanta  ? 

Mr.  Clements.  Yes,  sir.  We  made  other  adjustments  there  for 
which  it  nndertook  to  give  the  reasons  in  this  report.  We  were  deal- 
ing with  these  rates  to  these  different  places.  We  dealt  with  each 
one  from  the  place  of  origin  to  the  place  of  destination,  and  the  dis- 
tance was  taken  into  account,  and  Rome  being  75  miles  shorter  there 
was  that  difference,  and  the  same  thing  ran  through  the  others. 
There  was  not  an  absolute  making  of  rates  on  distance,  because  the 
Commission  took  into  consideration  the  water  rates  and  the  method 
which  the  railroad  had  agreed  upon  as  the  basis  for  counting  miles 
on  wator  as  compared  with  miles  on  land  in  their  adjustment  of  rates. 

The  Chairman.  In  the  finding  you  did  not  give  the  reasons.  Are 
the}^  given  there '? 

Mr.  Clements.  The  Commission  set  out  all  the  facts  in  its  con- 
clusion. 

The  Chairman.  The  reasons  for  it? 

Mr.  Clements.  The  reasons  for  what  it  did,  whatever  the}^  are. 
They  may  not  be  considered  good  by  these  gentlemen. 

The  Chairman.  Was  any  particular  reason  set  up  as  to  the  differ- 
ence between  Rome  and  Atlanta? 

Mr.  Clements.  None  at  all,  except  the  difference  in  distance. 

Senator  Dolliver.  Were  either  of  those  cities  parties  to  the  pro- 
ceeding ? 

Mr.  Cle:ments.  They  Avere  not. 

Senator  Dolliver.  Or  heard  ? 

Mr.  Clements.  They  had  witnesses  there  from  different  i^laces.  I 
do  not  remember  now,  but  they  were  not  parties  to  the  proceeding. 
The  complaint  was  brought  by  the  Cincinnati  Board  of  Trade  and 
brought  against  these  roads  leading  from  Cincinnati  into  that  terri- 
tory. The  roads  were  heard,  the  complainants  Avere  heard,  the  whole 
facts  Avere  ascertained  so  far  as  could  be  ascertained,  but  these  cities 
in  the  Southeast  did  not  intervene ;  they  did  not  come  in  and  ask  to  be 
made  parties.  They  Avere  not  sliut  out,  but  you  can  see  if  the  Com- 
mission undertook  Avhen  it  received  a  complaint  to  invite  all  interests 
that  might  be  affected,  directly  or  indirectl}^,  to  become  parties  to  the 
case,  which  they  maj^  do  if  tliey  ask  to  do  so,  it  would  Aviden  this  mat- 
ter out  beyond  limit. 

The  Chairjian.  Judge,  here  is  a  comparative  statement  showing 
the  rate  as  changed  from  Chicago  to  Knoxville  and  Cincinnati  to 
Knoxville.  I  Avish  3'^ou  Avould  glance  OA^er  it  and  see  if  these  changes 
as  noted  there  are  correct.  Wliether  it  would  not  have  that  effect  ac- 
cording to  the  decision  of  the  Commission  in  the  Maximum  Rate  Case. 
That  makes  a  very  material  change  or  difference  ? 


102 


KEGULATIO]Sr    OF   KAIL  WAY   RATES. 


Mr.  Clements.  "\Miy,-yes;  it  did  make  a  material  diiference.  Of 
course  I  can  not  verify  all  these  figures  in  a  moment. 

The  Chairman.  I  believe  you  wrote  the  decision,  did  you  not? 

Mr.  Clements.  Yes,  sir. 

The  Chair:han.  Then  you  can  readil}'  say  whether  that  is  accurate, 
that  comparison? 

IVIr.  Clements.  I  have  looked  at  some  of  these  rates.  As  I  remem- 
ber it,  they  were  the  rates  in  that  case,  and  I  have  no  doubt  this  is  a 
correct  presentation  of  them.  I  have  them  here  in  the  report  of  the 
Commission. 

The  Chairman.  If  that  is  correct,  let  it  go  in  the  record.  It  can 
come  in  here  or  elsewhere. 

Mr.  Clements.  Before  .putting  it  in  as  a  part  of  my  testimony  I 
should  want  to  verify  it,  which  is  more  than  I  can  do  here  on  my 
feet  in  a  moment. 

The  Chairman.  You  can  put  it  in  subject  to  correction.  If  you 
find  it  is  correct,  you  may  say  so ;  and  if  you  find  it  is  not,  you  may 
state  in  what  particular. 

Mr.  Clements.  If  you  will  allow  me  to  put  in  the  whole  report,  it 
will  tell  the  whole  story. 

The  Chairman.  According  to  the  change  ? 

Mr.  Clejnients.  Yes,  sir.  There  is  a  table  there  showing  just  what 
the  changes  would  be. 

The  Chairman.  I  would  like  to  get  that  point  settled  and  take 
only  half  a  page. 

The  following  is  the  table  referred  to : 


[Rates  in  cents  per  100  pounds.] 


To- 


From— 


Knoxville  — 
Chattanooga 

Rome 

Atlanta 

Meridian  ... 
Birmingham 
Anniston  ... 
Selma 


/Chicago . . . 
l^Cincinnati 
/Chicago... 
tCincinnati 
/Chicago... 
/Cincinnati 
If  Chicago... 
l\Cineinnati 
I/Chicago . . . 
JtCincinnati 
/Chicago... 
^Cincinnati 
I /Chicago... 
j\Cincinnati 
I/Chicago... 
i1  Cincinnati 


Classes. 


T3 

o 

© 


116 

76 
116 

76 
147 
107 
147 
107 
134 
122 
119 

89 
147 
107 
138 
108 


93 

.53 
100 

60 
114 

75 
126 

86 
114 
114 
111 

87 
126 

86 
i  128 

;  108 


P3 


99 
65 

99 

65 
126 

93 
126 

92 
109 
102 
103 

79 
126 

92 
126 
102 


79 
45 

88 
54 
97 
64 

107 
73 
98 
98 
95 
74 

107 
73 

113 
92 


cj 

« 


82     62 

57  I  37 
82  !  65 
57     40 


4. 


106 

79 

81 

54 

106 

85 

81 

60 

91 

82 

89 

80 

83 

72 

68 

60 

106 

85 

81 

60 

103 

89 

88 

78 

64 
47 
64 
47 
85 
68 
85 
68 
76 
75 
64 
55 
85 
68 
80 
71 


5. 


37 

23 
39 
24 
49 
34 
50 
■So 
47 
49 
44 
36 
50 
35 
.53 
48 


6. 


42 
30 
42 
30 
58 
46 
58 
46 
55 
54 
42 
36 
58 
46 
53 
47 


<B 


32 
20 
34 
22 
38 
24 
39 
27 
38 
38 
34 
28 
39 
27 
38 
36 


Senator  Newlands.  Is  the  decision  a  long  one  in  that  case  ? 

Mr.  Clements.  No,  sir ;  it  is  not  very  long — 27  pages. 

The  Chairman.  The  Judge  has  said  he  would  correct  that.  It  has 
gone  in  subject  to  correction.  The  stenographer  will  insert  it,  and  if 
the  Judge  finds  it  is  not  correct  he  will  state  it. 

Mr.  Clements.  I  will  look  over  it,  if  you  want  me  to.  Now,  that 
is  used  here  as  an  argument  to  the  effect  that  under  any  law  which 


REGULATION    OF    E  AIL  WAY    RATES.  103 

authorizes  the  Commission  to  deal  with  these  rates  it  might  lead  to 
adjustment  of  a  great  many  rates.  That  is  true.  There  is  no  dispute 
about  that. 

The  Chairman.  How  many?     Just  state  right  there. 

Mr.  Clements.  I  don't  know  how  many  could  have  been  affected 
there. 

The  Chairman.  Hundreds? 

Mr.  Clements.  Hundreds. 

The  Chairman.  Thousands? 

Mr.  Clements.  Hundreds;  I  do  not  know  whether  thousands  or 
not. 

The  Chairman.  A  great  manj^  ? 

Mr.  Clements.  It  would  have  operated  to  do  that. 

Senator  Dolliver.  Now.  Judge,  I  found  very  great  interest  in  your 
statement,  and  I  think  you  agree  with  the  witnesses  on  both  sides 
that  to  confer  general  rate-fixing  power  on  the  Commission  would  not 
be  desirable  ? 

Mr.  CLE:siENrs.  I  do. 

Senator  Dolliver.  And  I  have  found  a  good  deal  of  difficulty  in 
this  Maximum  Rate  Case  on  account  of  the  size  and  the  scope  of  it. 
I  want  to  read  now  what  the  Supreme  Court  said  of  the  order  in  that 
case,  and  ask  your  opinion  about  it  as  a  practical  question: 

There  is  nothing  in  the  act  requiring  the  Commission  to  proceed  singly  against 
each  raih-oad  company  for  each  supposed  or  alleged  violation  of  the  act.  In 
this  very  case  the  order  of  the  Commission  was  directed  against  a  score  or  more 
of  companies  and  determined  the  maximum  rates  on  half  a  dozen  classes  of 
freight  from  Cincinnati  and  Chicago,  respectively,  to  several  named  southern 
points  and  territory  contiguous  thereto.  So  that  if  the  power  exists,  as  is 
claimed,  there  would  lie  no  escape  from  the  conclusion  that  it  would  be  in  the 
discretion  of  the  Commission  of  its  own  motion  to  suggest  that  the  interstate 
rates  on  all  the  roads  in  the  country  were  unjust  and  luireasonable  and  notify 
the  several  roads  of  such  opinion,  direct  a  hearing,  and  upon  such  hearing  make 
one  general  order  reaching  every  road  and  covering  every  rate. 

Now,  in  your  opinion,  how  far  is  that  suggestion  of  the  Supreme 
Court's  decision  applicable  in  a  practical  sense? 

Mr.  Clements.  Well,  I  tliink  that  is  rather  overstating  the  business. 

Senator  Dolliver.  How  far  ? 

Mr.  Cle:ments.  I  understand  it  is  proposed  in  this  legislation  to 
deal  with  a  complaint. 

Senator  Dolliver.  How  is  that? 

Mr.  Cleiments.  That  the  Commission  i-hall  pass  upon  a  rate  that 
is  complained  of.  and  beside?  that,  undertaking  to  deal  with  every 
rate  in  the  wliole  country  and  between  every  station  in  the  country 
would  require  proceedings  which  would  be  too  long  for  practical  pur- 
poses.   Xow,  let  me  answer  that  in  another  way. 

On  January  1,  1900,  the  roads  doing  business  in  the  official  classi- 
fication territory,  about  60  or  65  of  them,  had  Mr.  Gill  as  the  chairman 
of  what  is  called  the  official  classification  committee.  About  13  or  14 
members  were  on  that  committee,  from  each  one  of  the  principal 
roads  in  that  territory,  the  New  York  Central,  the  Penns^dvania,  and 
so  on — not  every  little  road  has,  but  the  principal  roads  each  have  one 
on  that  committee.  Now,  65  roads  in  that  territory  filed  with  the 
Interstate  Commerce  Commission  a  statement  that  their  rates  and 
charges  on  freight  would  be  governed  by  the  official  classification, 
and  whenever  any  publication  is  made  by  the  official  classification 


lO'l  "    REGULATION    OF   RAILWAY   RATES. 

committee,  it  is  a  publication  of  their  classification.  It  applies  to 
them.  They  have  adopted  it  before,  and  they  have  filed  a  notice  to 
that  effect,  that  that  is  their  classification  and  they  are  to  be  governed 
by  it.  That  applies,  as  I  say,  to  some  G5  roads  in  all  that  great  terri- 
tory east  of  Chicago.  Along  in  the  latter  days  of  1899  that  committee 
got  together  and  worked  among  themselves  on  classification  rates 
and  they  issued  a  document  called  "  Classification  Xo.  20."  It  was 
their  custom  to  issue  one  every  year,  the  first  of  the  year. 

The  Chairman.  Right  there.  In  the  last  report  the  Commission 
stated  it  would  be  noted  that  the  number  of  cases  by  no  means  meas- 
ures the  rate,  since  a  single  case  can  be  brought  b}'  a  municipal  organi- 
zation or  by  shippers  in  an  important  locality,  reaching  numerous 
sections  and  distant  j^oints;  and  it  shows  how  comprehensive  these 
changes  would  be. 

Senator  Kean.  In  other  words,  with  one  rate  you  could  fix  all 
rates  ? 

Mr.  Clements.  Fix  a  good  man}^     Now,  let  me  proceed. 

There  were  65  roads  in  that  great  territory,  all  operating  under  the 
official  classification  promulgated  b}^  the  committee  of  15.  And,  by 
the  way,  the  word  "  official  "  does  not  signify  anything  there.  It  is 
just  the  name  they  took  to  describe  their  committee  in  that  territory. 
As  I  said,  it  is  their  practice,  and  has  been  for  j^ears,  to  file  with  the 
Commission  public  notice  that  the  classification  issued  from  time  to 
time  b}'^  this  committee  is  the  classification  of  each  one  of  these  roads, 
and  it  is  in  form  and  done  formally.  There  are  other  roads  in  that 
territory  without  a  notice  of  that  sort  filed  beforehand  who  do  adopt 
the  same  classification. 

Now,  in  the  latter  days  of  1899  this  committee  got  together  and 
formulated  what  they  called  "  Classification  No.  20,"  which  was  to 
take  effect  January  1,  1900,  from  that  territoiy,  making  a  new  classifi- 
cation for  the  folloAving  year.  They  worked  over  it  for  days,  and  I 
do  not  know  how  long  amongst  themselves,  and  when  they  published 
it  it  contained  in  it  between  600  and  TOO  changes  in  rates,  which  would 
not  be  changing  the  rate  from  25  cents  to  80  or  40  cents  by  name,  but 
by  taking  one  or  a  dozen  articles  out  of  classification  No.  6  and  put- 
ting it  into  class  No.  5,  and  out  of  No.  5  into  class  No.  4,  because  the 
rates  applied  according  to  the  number  of  classification.  There  was  a 
flood  of  complaints  by  telegraph  and  by  letter  that  came  to  the  Com- 
mission as  soon  as  this  letter  was  given  out.  Inasmuch  as  it  involved 
an  increase  in  man}'  rates,  it  was  required  under  the  law  to  be  filed 
ten  days  before  it  was  to  take  effect,  so  that  b}^  the  20th  of  January 
the  public  was  advised  of  what  was  to  be  done. 

The  Commission  was,  I  say,  overwhelmed  by  complaints,  by  letter, 
by  telegram,  and  by  individuals  who  came  to  the  Commission's  office 
to  talk  about  it  and  protest  against  it  and  ask  that  something  be 
done  to  prevent  its  going  into  effect.  It  took  sugar  out  of  one  class 
and  put  it  into  a  higher  one,  thereby  increasing  the  rate  on  sugar  in 
all  that  territory  and  between  all  the  stations  in  that  territory.  It 
took  soap  in  carloads  and  less  than  carloads — and  what  moves  more 
fi'eely  than  soap  and  sugar — to  everj^  station  in  America.  And  when 
you  put  a  little  infinitesimal  increase  in  freight  on  all  that  is  carried 
in  carloads  or  less  than  carloads,  over  a  ijreat  extent  of  territorv  like 
that,  it  means  a  great  amount  of  revenue.     The  same  was  true,  I  say, 


REGULATION    OF    RAILWAY    RATES.  105 

with  between  600  and  800  articles.  These  things  were  lifted  up  from 
one  class  to  another  by  that  committee  and  promulgated  to  take  effect 
within  ten  days.  The  Commission  had  no  power  to  suspend  the 
operation  of  it.  Its  duty  under  the  law  'was  to  file  it.  It  was  manda- 
tory. They  presented  it  and  we  filed  it.  That  was  all  we  could  do. 
These  people  came  down,  they  telegraphed  us  and  wrote  us,  and  we 
notified  the  railroads,  Mr.  Gill  and  some  of  his  committee,  to  come 
down  and  give  their  reasons  for  it  and  have  a  public  liearing. 

There  was  of  course  no  possible  time  in  which  the  Commission 
could  hear  and  write  up  the  facts  and  take  any  step  which  would 
prevent  the  rates  going  into  effect.  But  they  wanted  a  hearing. 
We  asked  the  roads  to  come  down,  through  Mr.  Gill,  and  Mr.  Gilford, 
of  the  New  York  Central,  a  very  intelligent  and  experienced  traffic 
man,  and  many  others  came.  ^\.nd  they  said,  ''  Yes,  we  have  changed 
this  classification.  We  have  done  it  in  order  to  raise  more  revenue. 
We  have  increased  expenses  to  meet  them.  We  have  to  pay  more  for 
labor,  more  for  rails,  more  for  bolts,  more  for  bridges,  and  for  mate- 
rial to  build  and  run  railroads;  we  need  more  money."  They  were 
asked  if  they  were  not  getting  more  on  account  of  the  increase  of 
volume  of  traffic,  and  they  said,  "  Yes ;  but  we  can  not  rely  on  that 
alone.  We  think  we  are  entitled  under  all  the  circumstances  with 
this  prosperity  and  flood  of  business  to  get  more  in  order  to  meet 
our  expenses."  They  were  frank  and  candid,  and  there  was  no  con- 
cealment, and  then  it  was  brought  out  they  did  it  in  conference,  and 
when  the  committee  of  15  formulated  this  new  classification  a  copy 
of  it  was  sent  to  each  one  of  these  65  roads  which  operated  and 
worked  under  it,  and  they  did  not  promulgate  it  until  they  received 
the  assent  of  each  one  of  them  substantially  to  let  it  be  published 
and  go  into  effect.  It  was  alleged  by  these  shippers  that  that  was  a 
conspiracy,  that  it  Avas  an  agreement,  that  it  was  a  combination,  and 
that  it  was  not  done  hy  each  road  independently.  They  could  not 
put  it  in  until  each  one  agreed  to  it,  and  therefore  the  action  of  each 
one  depended  on  the  action  of  each  other;  that  one  could  not  main- 
tain it  and  others  disregard  it.  They  admitted  that,  and  the  sliippers 
asked  to  have  the  testimony  sent  to  the  Attorney-General,  and  on 
their  request  we  sent  it  to  him  for  an  expression  of  opinion  as  to 
whether  or  not  it  violated  the  antitrust  law ;  not  that  the  Commission 
was  undertaking  to  assume  jurisdiction  to  enforce  that,  but  it  com- 
plied with  the  request  of  this  great  body  of  shippers  who  wanted  us 
to  present  the  matter  and  ask  the  opinion  of  the  Attorney -General 
about  it. 

Senator  Kean.  What  did  the  Attorney-General  decide? 

Mr.  Clemekts.  Attorney-General  Griggs  decided  that  it  did  not 
show  any  violation  of  the  antitrust  law.  Classification  No.  20  went 
into  effect  the  1st  day  of  January. 

Senator  Newlands.  In  what  j^ear  ? 

Mr.  Clements.  1900 ;  there  was  no  way  to  stop  it.  It  was  done  by 
all  these  roads  together.  It  was  done  in  one  paper  to  which  they 
had  all  agreed,  and  it  went  in  effect  in  the  twinkling  of  an  eye,  so  far 
as  the  public  was  concerned.  The  public  had  not  been  consulted 
about  it  in  any  form  or  way,  though  a  shipper  here  or  there  might 
have  been. 


106  EEGULATIOX    OF   KAILWAY   EATES. 

Senator  jSIewi.ands.  Do  you  knov;  how  innch  increase  in  revenue  it 
made? 

Mr.  CLEr.iENTS.  I  do  not  know. 

Senator  Kean.  How  much  did  the  price  of  soap  advance  to  the  con- 
sumer ? 

Mr.  Cee:ments.  I  do  not  remember,  but  it  went  from  the  class  6  to 
class  5. 

Senator  Kean.  A^'liat  did  the  consumer  have  to  i^ay? 

Mr.  Clements.  I  do  not  know. 

Senator  Keax.  He  did  not  pay  any  more,  did  he? 

Mr.  Ci.!=::^"EMTS.  I  have  no  doubt  he  did;  I  have  no  doubt  of  it; 
but  I  could  not  work  it  out  for  you.  Irs  it  possible  that  you  can 
increa-e  the  price  of  the.--e  things  and  it  never  affects  the  man  who 
consumer  them?  1  tliiidv  the  consumer  is  a  man  wiio  does  pay  for 
most  of  these  things.  If  the  consumer  never  pays  this,  I  do  not  see 
any  reason  wliy  the  roads  should  not  take  about  what  they  please. 
Nobod}'  pa3's  for  it?  I  have  never  seen  auy  vray  in  vhich  you  could 
give  one  man  money  without  taking  it  from  another,  unless  you  could 
make  it — manufacture  it. 

Senator  Neweaxds.  To  what  did  the  rate  apph'? 

Mr.  Clemejsts.  The  rate  applied  to  class  5  and  class  6,  but  the 
increase  was  from  the  rate  which  applied  to  class  6  to  the  rate  apply- 
ing to  class  5. 

Senator  Newlaxds.  The  transfer  is  onlv  made  from  class  6  to  class 
5  ?     Is  that  the  case  ? 

Mr.  Clements.  When  you  take  an  article  out  of  the  sixth  class  and 
put  it  in  the  fifth  class,  you  have  raised  the  rate.  It  went  over  this 
Avhole  thing,  between  600  and  800  articles.  Hay  was  one,  soap  was 
another,  sugar  was  another.  Now,  if  it  can  be  assumed  that  it  did 
not  hurt  the  producer  and  did  not  hurt  th.e  consumer,  then  there  is 
no  harm  done;  but  how  you  can  w^ork  that  out,  I  do  not  know.  Now, 
there  was  a  case  where  the  railroad  disturbed  the  whole  situation. 
That  fixed  these  rates  on  between  GOO  and  800  articles  in  the  whole 
territory,  and  that  did  not  onij^  affect  the  rate  in  that  territory,  but 
it  affected  the  rate  from  that  territory  into  any  other  territory  on  all 
these  articles. 

Senator  Newlands,  Do  you  know  how  many  additional  tariffs 
were  filed  as  a  result  of  those  changes? 

Mr.  Clements.  I  could  not  tell  you  that.  A  great  m.any  were 
filed  within  three  months.  The  committee  took  every  paper  up  and 
revised  it  and  reduced  a  Avhole  lot  of  these  increases.  It  is  fair  to  say 
that.  The}'  found  it  created  too  much  trouble  or  did  not  work  well, 
or  was  going  to  cut  off  some  of  the  business,  or  for  some  reason  or 
other,  and  in  three  months  after  that  they  revised  it  themselves. 
They  did  not  have  the  exclusive  knowledge  to  enable  them  to  do  a 
perfect  work,  and  so  they  went  about  it  again,  and  every  time  they 
did  it  they  disturbed  the  situation.  They  disturbed  another  rate; 
they  disturbed  the  rates  all  over  the  country,  if  changing  rates  is  a 
disturbance.  But  it  did  not  stop  the  rounds  of  the  earth ;  it  did  not 
stop  commerce ;  it  did  not  plunge  everything  into  chaos  and  ruin.  It 
disturbed  a  great  many  shippers,  and  there  Avas  a  loud  protest.  You 
will  see  it  in  this  document  here.  These  protests  are  set  out  there. 
There  were  a  few  lawsuits  that  came  from  it.     They  complained  of  the 


REGULATION    OF    RAILWAY   RATES.  107 

rate  on  soap.  The  hay  people,  an  association  of  strong  men,  got  to- 
gether, and  they  complained  of  the  rate  on  hay.  We  decided  in  that 
case  it  was  an  unjustifiable  increase. 

Senator  Dolliver.  If  the  Elkins  law  had  been  operative  at  that 
time,  is  it  your  opinion  that  the  Commission  could  have  made  these 
railroads  a'party  to  the  proceedings  and  secured  an  injunction  against 
the  change  in  the  classification  of  those  goods? 

Mr.  Cle^iekts.  Well,  I  should  doubt  it.  The  Supreme  Court  lias 
decided  the  Commission  could  not  make  a  rate  for  the  future.  _  The 
Commission  never  attempted  to  make  one  for  the  future,  but  it  did 
attempt  to  condemn  the  excessive  part  of  a  rate  the  whole  of  which 
was  found  to  be  unreasonable.  The  Supreme  Court  said  that  doing 
tliat  operated  to  fix  a  rate  for  the  future.  The  Commission  did  not 
undertake  to  promulgate  a  rate ;  it  attempted  to  stop  an  excessive  part 
of  the  rate  which  the  roads  had  already  made.  It  could  not  be  done 
because  it  was  a  legislative  rating  and  had  not  been  conferred  on  a 
commission.  Can  a  court  do  a  legislative  act  ?  If  a  court  undertakes 
to  enjoin  any  more  than  85  cents  out  of  a  hundred-cent  rate,  will  not 
that  body  fix  a  rate  for  the  future  for  the  road  to  observe?  Will  not 
that  be  an  act  of  the  court?  Can  the  court  by  injunction  judicially 
make  a  rate  for  the  future  for  a  railroad  when  that  is  said  to  be  a 
legislative  act?  That  was  what  the  Commission  undertook  to  say; 
to  simply  enjoin  the  application  of  the  excessive  part  of  a  rate,  not  to 
fix  a  rate  for  the  future,  for  the  roads  might  make  anything  else 
under  that  they  pleased. 

Senator  Newlands.  That  case,  it  seems  to  me,  was  an  action  of 
mandamus.  Do  you  think  it  would  have  made  any  difference  if  it 
had  been  a  suit  for  injunction? 

Mr.  Clements.  In  which  case  ? 

Senator  Newlands.  The  maximum-rate  case  to  which  you  refer. 

Mr.  Clements.  No;  that  was  an  injunction  that  we  were  asking 
for. 

Senator  Newlands.  As  I  understand  it,  and  I  was  just  looking 
over  the  decision,  it  was  a  proceeding  for  mandamus,  the  carriers  to 
observe  a  rule  that  you  had  made. 

Mr.  Clements.  I  guess  we  undertook  to  use  the  language  in  the 
sixteenth  section.  "'  Injunction  or  mandatory  order  or  other  process," 
whatever  it  was. 

Senator  Newlands.  Is  there  not  this  distinction :  You  assumed  you 
had  the  right  to  fix  the  maximum  rate  ? 

Mr.  Clements.  We  assumed  we  had  the  right  to  say  how  much  of 
an  unreasonable  rate  was  unreasonable. 

Senator  Newlands.  And  ordered  a  discontinuance  ? 

Mr.  Clements.  A  discontinuance  of  the  unreasonable  part  of  it. 

Senator  Newlands.  You  assumed  that  it  was  their  duty  to  obey 
that  order,  and  hence  you  brought  a  proceeding  in  mandamus  com- 
pelling them  to  discharge  their  duty  under  the  law.  Is  there  not 
some  distinction  between  that  and  bringing  up  a  proceeding  to  ob- 
tain an  injunction  preventing  them  from  collecting  a  rate  which  you 
have  condemned  as  extortionate? 

Mr.  Clements.  I  think,  Senator,  if  you  will  look  at  that  case  you 
will  see  what  we  asked  was  an  injunction  against  the  enforcement 
of  anv  other  rate  in  excess  of  that  which  we  had  said  was  the  limit  of 


108  KEGULATION    OF   E  AIL  WAY   EATES. 

the  reasonable  rate.     But.  whatever  the  process  may  be,  the  court 
has  said  that  was  in  effect  fixing  the  maximum  rate  for  the  future. 

Senator  Newlaxds.  That  is  true ;  but  it  seems  to  me  in  mandamus 
3'ou  had  a  right  to  rely  upon  your  power  to  condemn  the  excess  over 
a  reasonable  rate  as  extortion.  Now,  then,  mandamuses  only  lie  to 
comf)el  them  to  decide  their  duty  under  the  law,  and,  as  I  understand 
it,  the  writ  of  injunction  would  apply  entirely  regardless  of  the 
question  as  to  whether  you  had  a  power  to  fix  rates  or  not. 

Mr.  Cle^ients.  I  think  you  Avill  find  that  what  we  were  trying  to 
do  there  was  to  enjoin  them.  That  was  what  we  were  asking  for. 
That  was  drawn  by  the  lawj^ers.  I  have  no  doubt  you  wall  find 
Avhat  was  asked  for  there  was  an  injunction. 

Senator  Dolliver.  I  had  an  idea  that  this  change  in  the  classifica- 
tion created  a  change  in  the  rate.  If  the  Elkins  law  had  been  at  that 
time  enforced,  could  not  the  Commission  have  gone  into  the  circuit 
court  and  asserted  that  that  change  in  the  classification  created  in 
these  cases  an  unreasonable  rate,  and  asked  the  court  to  enjoin? 

Mr.  Clements.  I  do  not  know  any  provision  in  the  Elkins  Act 
which  authorizes  that,  Senator. 

Senator  Dolliver.  ^Vii  unreasonable  rate  is  a  violation  of  the  law, 
and  section  3  of  the  Elkins  law  seems  to  provide  that  that  process 
may  be  made  applicable  to  any  violation  of  the  interstate-commerce 
law. 

]Mr.  Ci>EMENTS.  I  think  if  you  will  examine  that  carefully  you  will 
see  it  refers  to  discriminations. 

Senator  Dolliver.  I  think  it  does,  but  also  to  any  other  unlawful 
act. 

Mr.  Clements.  Any  discrimination  forbidden  by  law.  I  think 
you  will  find  it  is  limited  by  that.  Suppose,  now,  that  the  Commis- 
sion had  filed  a  bill  and  sent  this  testimony  to  the  Attorney-General. 
Suppose  they  had  filed  a  bill  at  that  time. 

Senator  Kean.  Is  not  any  unjust  change  in  classification  and  dis- 
crimination forbidden  by  law? 

]Mr.  Clements.  The  law  requires  the  carriers  to  file  their  classifica- 
tions— make  them  and  file  them  with  their  rates — and  the  Commission 
is  not  permitted  to  participate  in  making  them  for  them. 

Senator  Kean.  It  is  an  unjust  discrimination  and  can  be  enjoined? 

Mr.  Cle:ments.  Well,  a  great  manv  of  these  rates  doubtless  w^ould 
not  have  been  challenged  as  an  unjust  discrimination.  They  were 
challenged  as  being  excessive.  We  did  find  in  the  Hay  Case  there  was 
an  element  of  discrimination,  but  that  it  was  unreasonable  also,  and 
there  w^ere  doubtless  some  discriminations. 

But,  now,  think  of  the  situation.  There  is  a  paper  filed  on  the  20th, 
terms  of  which  are  to  go  into  effect  on  the  1st  of  the  following  month. 

Senator  Newlands.  Mr.  Clements,  before  we  get  to  that,  I  will  read 
a  quotation  from  this  Maximum  Rate  Case. 

Mr.  Clements.  Let  me  ask  you  this  question:  With  what  intelli- 
gent degree  of  information  coidd  the  Commission  go  into  a  court 
in  those  two  days  and  classif;\'  all  of  those  changes,  six  or  eight  hun- 
dred, and  even  lay  a  prima  facie  foundation  for  an  intelligent  allega- 
tion in  regard  to  each  one  of  them?  Some  of  them  may  have  been 
reasonable  and  some  unreasonable,  some  discriminatory  and  some  not. 
It  is  a  wholly  unworkable  proposition  to  act  in  time  to  prevent  the 


REGULATION    OP    RAILWAY   RATES.  109 

application  of  a  change  like  that.  Then,  suppose  we  had  gone  on 
taking  it  up  rate  by  rate,  as  has  been  suggested  here,  on  one  line  after 
another.  None  of  us  here  would  have  lived  long  enough  to  be  able 
to  get  through  with  this  line  of  hundreds  of  articles— six  or  seven 
hundred  at  one  time.  They  were  increased  generally  for  one  reason, 
and  that  was  to  get  more  revenue.  They  frankly  said  they  picked 
out  the  articles  that  would  bear  it  best.  They  were  after  more 
money,  and  they  looked  around  and  saw  what  would  stand  it  best. 
There  was  no  concealment  of  the  purpose  or  method. 

Senator  Cullom.  The  railroads  fix  their  own  classification,  and 
there  is  no  law  to  prohibit  them  ? 

Mr.  Clements.  No,  sir. 

Senator  Cullom.  And  the  question  is  whether,  if  they  put  in  force 
the  actual  freight  under  them,  they  are  extortionate  or  not,  and 
unreasonable  ? 

Mr.  Clements.  Yes,  sir. 

Senator  Newlands.  As  to  the  remed}'.  Judge  Clements,  I  find  this 
m  the  opinion  of  the  court,  page  5 : 

We  perceive  in  tliis  case  that  tlie  Interstate  Commerce  Commission  assumed 
the  right  to  prescribe  rates  which  would  control  in  the  future,  and  their  appli- 
cation to  the  court  was  for  a  mandamus  to  compel  the  companies  to  comply 
with  their  decision ;  that  is  to  say,  by  their  determination  as  to  the  maximum 
rates  to  be  determined  in  the  future. 

I  understand  that  some  of  the  representatives  of  the  railroads  who 
have  appeared  before  us  contend  that  injunction  would  be  available 
in  order  to  prevent  the  imposition  of  a  rate  a  part  of  which  was  ex- 
cessive, and  that  the  injunction  would  lie  against  the  excess.  As  I 
understand  it,  this  case  was  brought  by  the  Attorney-General,  was  it 
not? 

Mr.  Clements.  No  ;  it  was  brought  by  us. 

Senator  Newlands.  You  made  up  the  case  and  sent  it  to  the  Attor- 
ney-General? 

Mr.  Clements.  Of  course,  it  was  proceeded  with  under  the  direc- 
tion of  the  Attorney-General,  as  are  all  of  these  cases. 

Senator  Newlands.  The  pleadings  were  prepared  there? 

INIr.  Clejients.  No;  I  guess  that  was  prepared  in  the  Interstate 
Commerce  Commission's  office,  and  by  the  United  States  attorney. 

Senator  Newlands.  Now,  I  am  not  sure  whether  there  is  anything 
in  the  point  or  not,  but  I  would  like  your  opinion  as  to  that.  As  I 
understand,  the  contention  is  that  injimction  would  lie  regardless  ef 
the  question  as  to  whether  the  Interstate  Commerce  Commission  has 
got  any  power  at  all  as  to  rates,  or  regardless  of  the  question  as  to 
whether  it  has  the  right  to  make  any  order  compelling  the  railroad  to 
desist. 

Senator  Clapp.  If  you  will  pardon  me.  Senator,  I  think  you  mis- 
take their  position.  Their  position  is  that  the  law  might  be  framed 
imder  which  that  could  be  done.  Under  existing  law  the  injunction 
could  only  lie  where  the  complaint  is  based  upon  discrimination.  I 
do  not  think  any  of  their  lawyers  would  claim  under  the  existing  law 
that  a  judgment  would  lie  against  existing  rate  on  the  ground  that 
the  rate  per  se  was  unreasonable. 

Mr.  Clements.  If  it  did,  under  that  decision,  it  seems  to  me  that 
the  court  could  not  fix  a  rate  for  the  future. 


110  EEGULATIOIs^    OF    RAILWAY    RATES. 

Senator  Neavlands.  I  understood  it  was  contended  an  injunction 
would  lie  to  restrain  an  extortionate  rate. 

Mr.  Clements.  I  do  not  know  any  authority  under  which  it  would 
lie.  Certainly  the  methods  by  which  these  cases  are  laid  out  in  the 
law,  it  says  how  the  Commission  shall  proceed,  how  it  shall  report, 
how  it  shall  investigate,  what  it  shall  do,  how  it  shall  file  its  pro- 
ceedings to  enforce  its  orders.     It  is  statutory. 

Senator  Newlands.  Now,  take  the  case  of  a  shijDper  who  com- 
plains of  an  extortionate  rate.  He  can,  after  j^aying  that  rate,  bring 
an  action  for  damages  for  the  extortion,  and  he  can  recover.  Now, 
suppose  he  brings  eight  or  ten  such  suits,  one  after  the  other,  and  re- 
covers, are  they  to  continue  to  collect  this  extortionate  rate?  Would 
he  not  have  a  right  to  go  into  equity  upon  the  ground  of  preventing 
a  multiplicity  of  suits,  and  enjoin  the  railroad  in  the  collection  of 
that  extortionate  rate?  Would  not  that  be  outside  of  the  inter- 
state-commerce act? 

Mr.  Clements.  I  could  not  say  whether  he  could  or  not.  I  would 
say  that  that  was  a  wholly  inadequate  remedy  for  the  wrongs  that 
are  suffered  by  reason  of  unjust  rates.  Mr.  Bond  referred  to  that 
process  in  his  discussion  of  this  matter.  He  said  you  could  put  it 
before  a  jury.  A  jury  here  to-claj'^  would  find  one  rate  reasonable, 
and  one  over  yonder  would  find  another,  and  you  could  have  no 
uniformity  of  rates.  The  law  requires  the  carriers  to  enforce  and 
collect  their  published  rate  so  long  as  they  are  published,  but  it  is  a 
crime  to  collect  any  other  rate  or  to  pay  back  any  part  of  it.  The 
law  has  fixed  the  published  rate  which  the}'  file  as  the  standard,  so 
long  as  it  is  not  condemned,  and  it  is  enjoined  upon  them  to  adhere 
to  this  rate,  and  they  are  punishable  for  deviating  from  it  either 
more  or  less.     Now,  there  must  be  some  way  in  which  to  correct  that. 

But  I  do  not  desire  to  go  away  from  the  question  that  Senator 
Dolliver  suggested.  I  realize  the  objection  to  it  and  the  difficulties 
about  it.  On  the  other  hand,  it  is  an  old  principle  of  law  that  will 
be  found  in  the  books  in  every  State  perhaps,  that  wherever  there  is 
wrong  there  must  be  a  remedy,  and  the  theory  is  that  the  remedy 
must  be  coextensive  Avith  the  wrong.  For  every  injury  there  must 
be  a  redress,  or  the  theory  of  it,  at  least,  and  tli^  one  must  be  as 
broad  as  the  other.  Now,  if  the  carriers  can  in  one  paper,  60  or  70 
of  them,  promulgate  rates — fix  rates  all  over  this  country  in  ten 
days — if  there  be  any  stijjervision  of  it,  there  must  be  a  supervision 
that  is  as  broad  as  any  injury  complained  of. 

Senator  Kean.  How  can  the  Interstate  Commerce  Commission 
do  that?  If  they  can  not  in  ten  days  revise  the  rate  on  six  or  eight 
httndred  articles,  how  can  they  take  the  whole  cotmtry  under  their 
eye? 

Mr.  Clements.  How  can  the  railroad  take  the  whole  country  and 
in  one  paper  upset  the  rates  all  over  the  country?  Is  it  to  be  as- 
sumed that  what  they  do  creates  no  wrong,  and  that  because  it  is 
big  we  must  run  away  from  it?  I  understand  that  the  American 
people,  by  their  history,  show  that  they  are  capable  of  dealing 
with  all  questions  and  conditions  as  they  arise. 

Senator  Dolliver.  If  it  were  possible  to  frame  the  law  so  that  the 
Commission  independent  of  the  Department  of  Justice  in  such  a  case 
as  you  have  described  could  immediately  apply  to  a  cowrt  of  equity 


REGULATION    OF    RAILWAY    RATES.  Ill 

for  a  temporarj"  injunction  on  the  ground  that  the  new  classification 
created  an  unreasonable  schedule  of  rates,  would  not  that  be  a  swift 
and  efiective  remedy  ? 

Mr.  Clejnients.  1  think  it  would.  I  think  it  would  be  a  very 
wholesome  thing. 

Senator  Dolliver.  Very  nuich  better  than  the  long  investigation 
of  a  year  or  two  by  the  Commission  while  the  rate  is  still  in  force? 

Mr.  Cle^ients.  I  think  it  Avould  be  a  verv  wholesome  thing;  that 
m  a  case  like  that  the  Commission,  or  somebody  else  representing 
the  public,  could  go  to  a  court  and  have  that  paper  suspended  and 
have  it  held  up  until  there  can  be  some  investigation  of  it,  and  before 
it  goes  into  effect. 

Senator  Dolltver.  Especially  if  the  complaint  in  equity  might 
prove  the  fact  that  there  v\as  an  unhiAvful  combination  of  carriers  to 
produce  this  result  ? 

Mr.  Clements.  It  might  be  that  there  was  good  ground,  and  the 
Commission  has  not  disputed  that  there  was  good  ground,  for  an 
increase  of  some  rate,  that  more  money  was  needed,  and  that  it  was 
not  assumed — and  I  am  not  pretending  now  to  assume — that  all  of 
this  business  was  wrong.  But  this  was  done  in  one  paper,  and  at  one 
time,  and  noboclj^  could  help  it.  In  two  or  three  months  they  were 
revising  it  themselves,  and  cut  out  some  of  these  increases.  There 
has  been  a  good  deal  of  this  increase  effected  by  putting  the  goods  at 
a  class  rate  that  for  some  time  back  had  been  going  at  a  commodity 
rate,  that  rate  being  much  lower  than  the  class  rate.  But  they  re- 
vised their  work,  still  leaving  in  a  great  mau}^  of  these  increases. 

I  want  to  call  your  attention  to  another  fact.  It  has  been  stated 
that  since  this  increase  is  made  in  different  sections  of  the  country, 
this  among  others,  that  there  has  been  a  process  of  reduction.  Now, 
we  must  not  be  misled  by  that  too  much,  becau-e  many  of  these 
reductions  that  are  spoken  of  are  high  yet,  occurring  since  that  time, 
in  southern  and  in  western  territory,  and  in  eastern  territory- -reduc- 
tions from  the  increases  that  were  then  made,  not  reductions  back  to 
the  old  rates.  So  that  it  is  not  fair  to  give  credit  for  everj^thing  that 
is  called  a  reduction  since  that  time,  which  in  the  end  was  nothing 
but  a  modification  of  the  increase  that  had  been  made,  for  many  of 
these  have  not  even  been  reduced  in  that  way. 

Xow,  here  is  another  illustration.  On  March  15,  1903.  there  was  an 
advance  in  class  and  conmiodity  rates  from  all  the  territories  to  Texas 
foints,  an  advance  from  the  Missouri  River  and  all  territory  east 
tliereof,  being  an  average  of  7.G  per  cent.  Xoav,  there  was  a  blanket 
advance,  an  advance  on  all  the  roads  on  all  the  class  articles  and  sub- 
stantially on  all  the  commodities  from  every  point  in  the  Missouri 
River  territory  and  east  thereof  into  Texas.  That  was  a  very  sweep- 
ing advance.  If  the  Interstate  Commerce  Commission  had  ever  made 
an  order  that  amounted  to  one-fourth  of  them,  it  would  have  been 
berated  here  as  a  rate-making  and  promulgating  act,  and  it  would  be 
said  it  had  undertaken  to  lay  hold  of  the  business  of  the  country  and 
held  up  all  these  industries  and  laid  its  heavy  hand  upon  these'^  mat- 
ters. But  where  does  the  man  who  is  said  to  have  the  right  to  a 
reasonable  rate  there  as  a  shipper  or  consumer  have  a  hearing?  Now, 
if  he  has  any  right  invoivecl  in  it,  there  must  be  some  place  in  the 
Government,  which  proposes  to  give  equal  justice  to  all  people,  where 
he  can  be  heard  and  say  something  about  it.     Now,  you  say  he  can  be 


112  REGULATION    OF    RAILWAY   RATES. 

heard.  He  can  be  heard  before  the  Interstate  Commerce  Commission 
now.  He  can  file  a  complaint,  and  grumble  about  it,  and  so  he  is 
heard.  When  I  refer  to  a  hearing,  I  mean  by  that  a  hearing  where 
a  wrong  can  be  stated  where  there  is  one,  and  a  right  can  be  put  in  its 
place.     That  is  the  kind  of  a  hearing  I  am  talking  about. 

Senator  Keax.  Pie  has  that  in  the  court,  has  he  not  ? 

Mr.  Clements.  I  think  not.  Even  upon  the  theory  that  he  could 
enjoin  the  enforcement  of  a  rate  because  it  was  unreasonably  high, 
the  court  Avould  not  undertake  to  say  how  much  the  road  should 
charge  next  week.  That  would  be  making  a  rate  b}^  judicial  action — 
a  rate  for  the  future.  There  are  man}-  other  increases  here  which 
I  have  written  in  this  memorandum.  I  have  not  undertaken  to 
put  in  the  little  ones,  but  a  few  that  occurred  at  the  time.  It  is 
the  large  and  sweeping  ones.  Xow.  I  repeat,  if  there  is  anything 
in  the  idea  that  the  people  are  to  have  an}^  place  where  they  can  be 
heard  with  eifect,  where  there  could  be  a  remedy  ad;ninistered  for 
an  ascertained  wrong,  the  remedy  must  be  as  broad  as  the  wrong. 
Otherwise  it  is  a  failure.  There  have  been  some  references  to  the 
Lumber  Case,  recentl}'  decided,  and  now  pending  in  the  court. 

Senator  Kean.  It  was  not  decided. 

Mr.  Cle3[ents.  By  the  Commission,  I  mean. 

Senator  Kean.  It  was  decided  by  the  Commission? 

Mr.  Clejmexts.  The  Commission  held  that  the  increase  was  un- 
reasonable and  unlawful. 

Senator  Keax.  The  Yellow-Pine  Lumber  Companj^? 

Mr.  Cleimexts.  Yes. 

Senator  Keax.  I  thought  the  Commission  stood  2  to  2. 

Mr.  Clemexts.  No;  3  to  2. 

Senator  Keax.  I  thought  it  was  2  to  2. 

Mr.  Ci.EMEXTS.  No,  sir. 

Senator  Keax.  I  did  not  know  that  the  other  man  was  here. 

Mr.  Clemexts.  Yes,  sir.  It  is  said  by  Mr.  Hines  in  respect  to  that 
matter  that  it  was  first  raised  to  14  cents  and  then  to  16  cents.  "  Then 
that  brought  about  a  corresponding  raise  east  of  the  Mississij^pi  River 
on  some  traffic,  because  it  had  been  brought  down  to  that  unreasonabl}'- 
low  figure  on  account  of  the  very  low  rate  west  of  the  IMissouri  River. 
Lumber  people  were  making  enormous  profits,  and  of  course  the  cost 
of  production  to  the  railroad  had  very  much  increased,  and  they  took 
advantage  of  the  opportunity  which  the  withdrawal  of  the  excessive 
competition  west  of  the  river  gave  them  to  raise  their  rate.  In  other 
Avords.  it  was  brought  down  simply  because  the  rate  from  Arkansas 
to  Cairo  came  down  to  13  cents,  and,  when  conditions  were  such  over 
there  that  the  rate  was  raised,  the  rate  east  of  the  river  was  raised 
accordingly.  I  think  lumber,  as  I  now  recall,  was  the  only  com- 
modity that  constituted  any  ver^^  important  part  of  the  change  where 
the  rate  was  raised.  As  I  say,  in  this  reduction  a  ver}^  low  figure  in 
the  first  place,  and  if  increased  afterwards  was  due  to  that  fact."  Now, 
it  would  seem  from  that  that  j^ou  are  to  understand  that  there  has  been 
a  low  rate  by  reason  of  competition.  The  carriers  from  Arkansas  to 
Cairo  made  a  13-cent  rate,  and  roads  from  Georgia  and  Missis- 
sippi had  to  meet  it  and  they  put  in  a  13-cent  rate.  And  when  the 
Arkansas  railroad  withdrew  that  excessive  competition  that  had  made 
the  13-cent  rate,  that  gave  the  opportunity  to  the  roads  east  of  the 


REGULATION    OF    IIAILWAY    RATES.  113 

river  to  come  in  and  take  what  they  thought  they  ought  to  have  out 
of  it. 

Now,  I  want  to  give  you  the  manner  in  which  that  matter  was  pro- 
ceeded with. 

Senator  Keax.  Is  that  the  Yellow  Pine  Case ? 

Mr.  Clements.  It  is  the  Georgia  Sawmill  Company,  as  it  is  called, 
H.  H.  Tift  &  Co.  et  al.  against  the  Southern  Railway  Company  et  al. 
These  cases  are  very  much  alike.  One  is  known  as  the  Georgia  Case 
and  the  other  is  the  Mississippi  Case. 

Senator  Kean.  AVe  have  in  the  record  the  whole  of  that  Mississippi 
Case,  put  in  by  ]\fr.  Robinson,  of  Louisiana. 

Mr.  Cleimekts.  Not  the  testimony  in  the  case,  I  presume.  I  only 
want  to  call  the  attention  to  the  manner  in  which  this  excessive  com- 
petition west  of  the  river  was  removed,  and  it  will  not  take  me  long 
to  do  that. 

It  would  appear  from  this  statement  of  Mr.  Hines  that  it  was  a 
very  innocent  and  natural  thing  in  the  course  of  business  that  there 
had  been  a  very  low  rate,  and  that  had  caused  a  low  rate  from  points 
east  of  the  river,  and  that  the  Arkansas  people  took  out  their  exces- 
sive competitive  rates  and  that  gave  the  opportunity  to  the  roads  in 
there  to  go  back  to  their  rates,  such  as  they  wanted. 

Mr.  Green,  a  witness  in  the  case  in  behalf  of  the  Southern  Rail- 
way, testified  as  follows : 

Mr.  EoATEiGHT.  With  reference  to  this  general  increase  in  the  lumber  rate 
through  the  yellow-pine  producing  section,  \Yas  there  any  effort  made  on  the 
part  of  the  Southern  Railway  or  other  Georgia  line,  in  your  knowledge,  to  have 
the  lines  west  of  the  river  increase  their  rates,  or  did  they  do  that  voluntarily 
and  without  suggestion?    I  am  referring  to  the  increase  in  1903. 

Mr.  Green.  Do  you  mean  a  conference  between  the  southern  lines  and  the 
lines  west  of  the  Mississippi  River? 

yiv.  BoATRiGHT.  Conference  or  understanding  or  suggestion ;  I  do  not  know 
which  it  might  be  called.  Was  there  any  effort  on  the  part  of  the  Georgia  line 
to  secure  this  advance  from  Arkansas  territory,  or  did  they  make  it  of  their  own 
volition  and  without  consultation? 

Mr.  Green.  I  will  relate  the  whole  story,  so  far  as  I  know  it.  My  information 
is  that  this  question  of  advance  rates  on  lumber  was  first  discussed  at  the  meet- 
ing in  St.  Augustine  on  January  28. 

Commissioner  Prouty.  What  year? 

Mr.  Green.  1903. 

Commissioner  Prouty.  You  are  referring  now  to  this  last  advance? 

Mr.  Green.  Yes,  sir.     That  rs  what  I  understand  he  is  asking  about. 

Mr.  BoATRioHT.  Yes.  sir  ;   the  last  increase. 

Mr.  Green.  The  conference  was  between  the  lumber-carrying  roads,  and  I 
think  possibly  representatives  of  some  of  the  Mississippi  lines  were  present ; 
but  there  were  none  from  west  of  the  river,  so  far  as  I  know.  I  was  not  present 
at  the  conference.  There  was  a  subsequent  meeting  at  New  Orleans  and.  I 
think,  a  third  meeting  at  St.  Louis,  at  which  I  believe  the  Arkansas  lines  were 
represented.  Whether  any  line  east  of  the  Mississippi  River  suggested  an 
advance  from  Arkansas  I  do  not  know. 

Mr.  P.OATRIGHT.  Were  the  rates  from  Arkansas  territory  as  well  as  Missis- 
sippi and  Alabama  all  put  into  effect  or  intended  to  be  put  into  effect -at  the 
same  time — April  15? 

Mr.  Green.  Yes,  sir. 

Mr.  BoATRiGHT.  Do  you  think  that  would  have  been  possible,  Mr.  Green,  with- 
out some  common  understanding? 

Mr.  Green.  I  do  not  think  there  is  any  doubt  about  the  date  the  rates  were 
to  become  effective.  We  would  hardly  want  to  put  our  rates  up  on  April  15 
from  Georgia  and  have  the  Arkansas  rates  go  in  on  the  30th. 

The  Chairman.  I  understand  Mr.  Boatright's  question  to  refer  to  the  lines 

741a— 05 8 


114  EEGULATION    OF    RAILWAY   RATES. 

east  of  the  I'iver,  including  your  road,  as  to  whether  they  made  au  effort  to 
induce  the  lines  west  of  the  river  to  advance  their  rates? 

Mr.  Green.  Speaking  for  the  Southern  Railway.  I  will  say  no. 

ilr.  BoATRiGHT.  In  speaking  for  the  others,  what  would  you  say? 

Mr.  Greex.  I  do  not  know  what. 

Mr.  Compton.  of  tlie  Louisville  and  Xashville  Eailroad,  a  traffic 
official  in  some  capacity,  testified  as  follows: 

Commissioner  Clements.  You  are  in  charge  of  the  trattic  of  your  road  and  I 
suppose  received  some  instruction  or  information  from  those  who  did  attend 
that  meeting,  or  some  information  as  to  what  was  to  be  done? 

Mr.  CoMPTox.  After  the  St.  Augustine  conference  I  had  a  conference  with 
'Mr.  Good\Ain — he  is  our  general  freight  agent — and  I  told  him  I  thought  it 
desiraiile  on  our  part  to  get  an  advance  in  <mr  rates  on  yellow  pine  lumber. 
Our  people  seemed  to  think  it  was  reasonable  that  we  should  have  an  advance. 
So  far  as  the  advance  in  the  rates  is  concerned.  I  say  to  you  that  we  had  no 
agreement  with  anybody  to  advance  these  rates,  and  what  the  Louisville  and 
Nashville  did  it  did  of  its  own  accord,  and  I  say  further  that  I  personally  su.s- 
pended  the  advance  of  these  rates  luitii  March  1,  because  we  all  thought  we 
ought  to  get  the  lumber  out.  I  acted  independently.  I  have  acted  in  no  other 
way.  I  will  say  that  I  am  under  no  restraint  in  handling  the  tratfic  of  the 
Louisville  and  Nashville  road. 

Commissioner  Clements.  Had  you  made  up  your  mind  to  advance  the  rates 
on  your  road  without  regard  to  what  the  Aricansas  roads  did,  whethei-  they 
advanced  theirs  or  not? 

Mr.  CoMPTON.  I  do  not  see  how  we  could  very  well  carry  higher. rates. 

Commissioner  Clements.  I  do  not  either :  Itut  one  step,  the  inference  seems 
to  be  from  all  you  say.  in  order  to  effect  your  own  increase,  was  to  get  the 
Arkansas  roads  to  advance  theirs.     Is  that  so? 

Mr.  Compton.  They  were  conferred  with.     There  was  free  consultation. 

Commissioner  Clements.  For  what  purpose? 

Mr.  Compton.  Everybody  expressed  their  views. 

Commissioner  Clements.  Would  you  put  up  your  rates  if  they  had  not  de- 
clai-ed  that  thes'  were  going  to  put  up  theirs  at  the  same  time? 

Mr.  Compton.  I  do  not  see  how  we  could  carry  a  higher  rate.  I  have  the 
right  to. 

Commissioner  Clements.  You  would  not  have  done  it? 

Mr.  Compton.  I  would  not  carry  rates  on  the  Louisville  and  Nashville  higher 
than  from  Arkansas. 

Commissioner  Clements.  You  would  not  put  them  up  uidess  they  declared 
that  they  were  going  to  put  up  theirs? 

Mr.  Compton.  I  would  not. 

Now,  I  have  read  that  simply  to  illustrate  the  manner  in  which 
these  increases  were  brought  about.  It  was  stated  here  that  when 
the  excessive  competition  of  the  roads  west  of  the  ^Mississippi  Kiver 
was  withdrawn,  which  was  expressed  in  the  increase  of  the  rates,  that 
gave  the  roads  east  of  the  river  a  chance  to  put  up  theirs,  whereas 
the  testimony  shows  that  three  conferences  were  held,  and  swung 
around,  one  at  St.  Augustine,  one  at  New  Orleans,  and  one  at  St. 
Louis,  and  it  took  three  of  them  to  bring  them  all  together,  which 
resulted  in  this  simultaneous  consultation  which  resulted  in  each  one 
getting  up  and  going  off  and  saj'ing  what  he  would  do.  Each  one  is 
independent. 

No  binding  agreement,  of  course,  was  made,  because  it  would  be  a 
crime  to  make  one.  And  each  one  is  independent,  because  he  can  not 
be  compelled  to  adhere  to  an  illegal  agreement.  But  each  one  wanted 
to  do  the  thing,  each  one  declared  that  it  was  a  good  thing  to  do,  and 
each  one  declared  it  to  each  of  the  others,  and  then  they  went  and 
did  it  by  a  common  agency,  which  published  a  common  rate  all  on 
a  common  date.  That  is  the  way  the  thing  is  done  now.  since 
these  agreements  and  combinations  have  been  revised,  since  the  de- 


REGULATION    OF    RAILWAY   RATES.  115 

cisions  of  the  Supreme  Court  in  the  Joint  Traffic  Case  aiid  in  the 
Missouri  Case  and  under  the  antitrust  hiw.  And  1  shoukl  think  tJiat, 
as  these  things  are  done  in  this  way,  it  affords  some  reason  wiiy  there 
should  be  some  public  supervision  somewhere,  so  that  if  these  people, 
looking  to  their  own  interests  with  the  view  of  getting  the  greatest 
net  revenue  for  all  parties  concerned,  should  happen  to  overstep  the 
margin  of  justice  and  right,  there  should  be  some  Avay  to  correct  it, 
whether  they  do  it  by  one  rate  or  by  wholesale,  as  between  Texas 
rates  and  in  the  classification  territory. 

Senator  Kean.  You  said  that  you  had  a  memorandum  showing  a 
large  increase  of  the  rates.  Have  you  a  memorandum  also  of  the  de- 
creases in  the  rates  for  the  last  six  months  ? 

Mr.  Clements.  No,  sir;  I  have  not  all  the  figures.  I  onl}^  have 
the  marked  ones. 

Senator  Kean.  Just  a  few  increases,  and  none  of  the  decreases? 

Mr.  Clements.  No,  sir;  I  did  not  bring  them.  I  told  you  that 
there  were  a  great  many. 

Senator  Kean.  A  great  many  decreases? 

Mr.  Clements.  Yes ;  decreases,  so  called ;  and  some  of  them  really 
were  decreases;  but  many  of  them  Avere  merely  modifications  of  in- 
creases, and  they  have  been  counted  as  decreases.  I  did  not  bring  this 
for  the  purpose  of  showing,  in  this  paper,  the  whole  matter,  but  I 
brought  it  here  for  the  purpose  of  showing  how  much  can  be  done  in 
one  paper. 

Senator  Kean.  AYere  not  the  increases,  then,  merely  modifications 
of  former  decreases? 

Mr.  Clements.  Oh,  well,  this  very  case,  this  lumber  case,  shows 
that  that  rate  of  13  cents  had  been  in  about  nine  or  ten  years. 

Senator  Cullom.  Yes ;  of  course  every  change  is  either  an  increase  , 
of  a  previous  decrease  or  a  decrease  of  a  previous  increase, 

Mr.  Clements.  Undoubtedlj^ 

Senator  Cullom.  It  was  either  a  reduction  or  an  increase. 

Mr.  Clements.  Yes,  sir;  undoubtedly  in  former  years  most  rates 
were  higher  than  they  are  now.  I  am  not  disputing  that.  But  many 
of  these  rates  had  not  for  a  long  time  been  any  higher  than  they  were. 
Mr.  Fish  thinks  that  I  am  mistaken  about  those  lumber  rates  having 
been  in  for  that  length  of  time.  It  is  my  recollection.  Here  is  what 
Mr.  Powell  said : 

Mr.  Powell.  Effective  January  2,  1888,  the  rate  on  lumber  from  Arkansas 
mills  between  Camden,  Ark.,  and  Texarkana,  Ark.,  to  Cairo  was  reduced  to  13 
cents  per  hundred  pounds.  Without  knowing  exactly  the  location  of  the  various 
mills  in  that  group,  I  should  say  the  average  distance  was  about  30.5  miles. 

Mr.  Baxter.  Well,  as  to  the  rate  of  13  cents  per  hundi'ed  pounds  w^hich  you 
say  was  in  effect  from  Arkansas  mills  to  Cairo  on  January  2,  1888,  how  long  did 
that  remain  in  effect"? 

Mr.  Powell.  It  remained  in  effect  until  1899. 

That  Avas  from  1888  to  1899,  according  to  his  testimony  in  respect 
to  those  rates.  Oh,  Mr.  Fish  says  that  he  had  reference  to  the  rates 
m  Mississippi.  I  was  talking  about  the  rates  in  Arkansas,  where  this 
fierce  competition  was  removed  and  the  rates  from  Mississippi  and 
Georgia  went  up.  And  according  to  Mr.  Compton's  testimony,  which 
must  be  perfectly  conclusive,  in  reason  as  well  as  because  he  testifies 
to  it,  one  of  these  roads  would  not  have  undertaken  to  increase  this 
rate  and  give  up  its  business  to  all  the  others  unless  it  had  an  assur- 


116  KEGULATION    OF    EAILWAY    RATES. 

ance  from  the  others  that  they  would  do  the  same  thing  at  the  same 
time. 

Senator  Newlands.  It  is  not  reasonable  to  expect  that,  is  it? 

Mr.  Clements.  No,  sir. 

The}^  did  not  make  any  agreement  to  do  it,  however,  as  they  say. 

Senator  Citllom.  Has  the  Commission  made  any  ruling  on  whether 
that  was  reasonable  or  not? 

Mr.  Clements.  Yes,  sir;  the  Commission  held  that  that  was  an  un- 
reasonable increase  and  an  unlawful  increase. 

Senator  Neavlands.  AVhat  action  did  the  railroads  take? 

Mr.  Clements.  They  disregarded  it. 

Senator  Newlands.  Is  that  now  pending  in  the  court? 

Mr.  CLE:\fENTS.  Yes,  sir.  The  shippers  had  in  this  matter  under- 
taken, to  do  just  what  is  suggested  here  before  the  Commission  acted 
and  before  the  filing  of  the  complaints  before  Judge  Spier  and 
Judge  Xiles.  There  was  a  complaint  filed  before  Judge  Spier  in 
Georgia  and  Judge  Niles  in  Mississippi.  Before  they  presented  any 
complaint  to  the  Commission  they  had  been  up  before  the  Commis- 
sion and  we  had  notified  the  officials  of  the  roads  of  it,  to  talk  it  over 
and  see  if  something  could  not  be  done  after  notice  was  given  and 
before  it  went  into  effect.  They  came  freely,  and  the  mill  men  came, 
and  they  had  it  out  before  the  Commission  and  tried  to  settle  it  by 
an  adjustment.  They  failed,  and  the  roads  insisted  upon  putting 
it  in. 

They  had  another  conference  in  Atlanta,  and  that  failed ;  so  that  it 
could  not  be  adjusted  between  them,  and  they  presented  their  com- 
plaints before  Judge  Spier  in  Georgia  and  Judge  Niles  in  Mississippi. 
Judge  Spier  held  that  he  had  jurisdiction,  but  it  was  a  question  of 
such  a  natiu-e  that  he  wanted  the  matter  passed  on  by  the  Interstate 
Commerce  Commission  before  he  would  undertake  to  deal  with  it. 
He  said  that  it  was  a  question  peculiarly  left  to  the  Commission  to  in- 
vestigate in  the  first  instance  and  he  wanted  the  benefit  of  that  inves- 
tigation, and  he  would  not  dismiss  the  bill.  He  overruled  a  conten- 
tion that  he  had  no  jurisdiction,  but  he  said  that  he  would  hold  it  until 
they  could  present  their  complaint  to  the  Commission  and  have  it  act, 
and  that  was  gone  through  with,  and,  as  I  understand  it,  the  under- 
standing between  the  roads'  and  the  complainants  is  that  that  matter 
will  be  heard  by  him  about  the  1st  of  June.  Judge  Niles,  as  I  re- 
member it,  decided  that  he  had  no  jurisdiction,  and  dismissed  the  bill. 
Now,  there  was  a  test  of  this  very  question.  He  held  that  he  had  no 
jurisdiction  to  enjoin  the  roads  in  the  matter  at  all.  I  do  not  know 
what  the  Supreme  Court  will  hold,  of  course,  but  there  were  two  de- 
cisions. Judge  Spier  entertained  it,  but  waited  for  the  report  of  the 
Commissi(m;  and  Judge  Niles  dismissed  it. 

Senator  Kean.  And  it  took  the  Commission  from  December, 
1903,  to  1004  to  decide  it,  and  they  did  not  file  their  opinion  until 
February,  1905. 

Mr.  Clements.  What  time  in  1903,  Senator,  was  it  filed  with  the 
Commission  ? 

Senator  Kean.  According  to  Mr.  Gardner's  testimony  before  the 
Commission,  the  case  was  filed  with  the  Commission  in  either  July 
or  August,  1903.     That  was  Mr.  Gardner's  testimony. 

Mr.  Clements.  Yes,  sir;  that  is  probably  true.  These  rates  were 
put  in  in  June. 


REGULATION    OF    HAIL  WAY  EATES.  117 

Senator  Kean.  And  it  was  decided  about  the  1st  of  March,  1905? 

Mr.  Clements.  Yes,  sir.  I  suppose  that  is  for  the  purpose  of 
showing  that  the  Commission  has  been  derelict? 

Senator  Kean.  ]Mr.  Gardner  was  discussino-  giving  additional 
powers  to  the  Commission. 

Mr.  Clements.  I  sui:>posed  the  Senator  from  NeAv  Jersey  called 
attention  to  it  for  some  reason. 

Senator  Kean.  I  did. 

Mr.  Clements.  That  shows  a  little  delay.  But  here  is  the  printed 
testimony  in  one  of  those  cases  [indicating  record]. 

Senator  Kean.  I  do  not  sec  very  w^ell  how  Mr.  Gardner  could  have 
done  anything  else  but  give  such  testimony,  after  having  3  to  2  of 
the  Commission  decide  in  his  favor. 

Mr.  Clements.  I  should  hardly  impute  to  Mr.  Gardner  a  motive 
such  as  that,  that  he  had  come  here  simply  because  he  had  won  a  case, 
if  you  could  call  it  Avinning  a  case.  Here  is  one  of  these  cases  contain- 
ing some  1,700  pages  of  testimony  filed,  with  the  exhibits.  There  is 
another  here  quite  as  elaborate.  It  is  not  strange  that  it  should  have 
taken  a  little  over  a  year,  with  all  the  other  engagements  of  the  Com- 
mission, to  make  a  decision  in  that  case.  There  have  been  about 
2,300  informal  complaints  disposed  of  in  the  last  fi^'e  j^ears  by  the 
Commission.  That  is  somcAvhere  betAveen  one  and  a  half  and  two  a 
day.  All  of  those  required  a  lot  of  letters  back  and  forth,  and  there 
is  a  large  volume  of  that  business  going  on  all  the  time.  The  Commis- 
sion can  not  close  its  doors  and  go  and  sit,  lilce  a  court,  you  know. 

Senator  Xeavlands.  I  do  not  understand  that  there  has  been  any 
complaint  that  the  Commission  has  not  been  active  in  its  work.  The 
question  is  raised  that  the  Commission  is  OA^erloaded  with  work  now, 
and  to  increase  its  jurisdiction  Avould  simply  delay  the  administration 
of  these  matters. 

Mr.  Clements.  I  understood  that  the  railroads  were  complaining 
here  because  Ave  did  not  enforce  the  laAv  against  them  rapidly  enough. 
That  is  the  Avay  that  I  ha\'e  understood  it. 

Senator  Neavlands.  That  is  true.  INlr.  Gardner  Avas  not  complain- 
ing, as  I  understand  it,  that  you  Avere  not  actiA^e  enough. 

Mr.  Clements.  I  do  not  think  that  any  undue  amount  of  time 
was  spent  on  that  case. 

Senator  Neavlands.  And  on  that  subject,  as  to  whether  or  not  this 
duty  that  is  assigned  to  the  Commission  Avill  so  increase  their  Avork 
as  to  make  it  practically  impossible  for  them  to  hear  and  determine, 
what  is  A^our  opinion? 

Mr.  Clemeis^ts.  I  should  think  not.  If  it  does,  we  could  find  some 
remedy  for  that,  I  suppose.  It  is  not  going  to  upset  the  business 
of  the  Avorld.  It  did  not  before.  And  people,  I  guess,  in  the  main, 
are  fairly  reasonable.  People  do  not  Avant  to  confiscate  railroads. 
I  am  sure  that  is  true.  You  maA"  go  out  in  the  countrA"  and  go  everv- 
where  and  you  Avill  find  that  nobody  Avants  to  confiscate  the  railroads. 
No  man  Avants  to  do  it,  and  the  courts  are  here  forcA^er  to  stop  it  if 
they  did.  But  the  shipper,  if  he  has  any  rights  whateA^er  in\"olving 
the  amount  of  the  rate,  I  repeat,  ought  to  have  a  place  somewhere 
where  he  can  be  heard  with  etfect  and  haA^e  a  correction  of  it. 

NoAv,  we  have  here  another  investigation  of  the  increase  of  the 
rates  on  grain  and  iron  articles,  and  so  forth,  and  Mr.  PoAvell,  of  the 


118  REGULATION .  OF    RAILWAY   RATES. 

Southern  Railroad,  a  very  reputable  gentleman,  who  knows  a  great 
deal  about  railroads  and  their  rates  and  their  business,  was  asked  in 
that  case  certain  questions,  and  testified  as  follows : 

You  draw  a  distinction  between  an  announcement  and  an  agreement  as  to 
what  was  done  at  the  New  York  meeting? 

He  had  been  attending  a  meeting  of  that  sort  regarding  these  rates 
and  made  some  statement  of  that  sort. 

You  do  not  mean  to  convey  the  idea  that  there  was  an  announcement  by  each 
road,  that  there  was  an  absolute  intention  to  raise  these  rates  regardless  of 
what  the  others  did? 

Mr.  Powell.  As  some  of  the  witnesses  have  explained,  all  rates  are  made 
after  discussion.  No  line  can,  in  point  of  fact,  without  a  great  deal  of  danger 
to  its  revenue,  without  notice  and  discussion  with  another  line  reduce  its  rates. 
The  effect  of  such  action  in  the  past  has  been  the  demoralization  of  the  rates. 
Therefore  at  all  meetings  the  advancement  or  reduction  or  the  reasons  for  and 
against  it  are  given,  as  a  general  thing.  Sometimes  it  requires  only  a  small 
amount  of  discussion,  and  sometimes  it  takes  considerable,  different  lines  having 
different  views  on  the  subject.  But  having  concluded  the  discussion,  it  is  the 
practice,  in  all  deliberations  in  which  the  Southern  participates,  to  make  sepa- 
rate announcements. 

Q.  They  did  not  mean  to  say  that  one  would  do  it  whether  the  other  did  or 
not? — A.  You  mean  advance? 

Q.  Yes. 

Mr.  Powell.  It  would  be  impossible  to  advance  rates  between  two  commercial 
centers  on  one  road  unless  it  was  done  by  competing  lines,  unless  the  first- 
named  line  would  go  out  of  business. 

Then  he  was  asked : 

So  it  is  fair  to  say  that  the  action  of  each  company  was  dependent  on  what 
the  others  did,  is  it  not? 

Mr.  Powell.  I  think  that  is  a  fair  statement. 

Now,  that  is  the  way  these  rates  are  increased.  They  get  together 
and  talk  it  over  and  say  that  it  ought  to  be  done,  and  each  one  goes  off 
and  they  all  do  it. 

Senator  Dolliver.  Are  the  reductions  also  made  by  the  same  kind 
of  agreement  ? 

]Mr.  Cle:mexts.  Yes,  sir.  They  are  frequently  made  the  same  way ; 
not  always. 

Senator  Dolliver.  Does  the  Commission  regard  that  as  a  violation 
of  law  ? 

Mr.  Clements.  It  can  hardly  find  that  it  is  a  violation  of  the  law 
that  it  is  charged  with  enforcing — the  interstate-commerce  law. 

Senator  Dolliver.  AVhat  do  3^011  think  of  the  wisdom  of  giving 
legality  to  such  agreements,  subject  to  the  revisory  power  of  the  In- 
terstate Commerce  Commission  ? 

Mr.  Cle:ments.  Tiie  powder  to  make  these  agreements,  to  make  rates, 
and  maintain  them? 

Senator  Dolliver.  Yes,  sir. 

Mr.  Clements.  I  have  always  been  afraid  of  that,  mj'self.  I  con- 
less  there  are  many  good  people  who  think  it  would  be  a  wise  thing 
to  do,  but  it  certainly  ought  not  to  be  done  without  some  adequate 
measure  of  correcting  a  wrong  when  it  is  done. 

Senator  Dolliver.  Supj)05ing  the  law  is  modified  so  as  to  give  the 
proposed  increase  in  power  I0  the  Commission  in  finally  adjudicating 
these  matters.  AMiat  would  you  say  as  to  the  legality  of  giving  the 
right  to  make  agreements — I  do  not  mean  pooling  contracts,  but 


KEGULATION    OF    RAILWAY   RATES.  119 

agreements  as  to  rate  schedules — where  railroads  are  involved  in 
the  same  traffic  ? 

Mr.  Clements.  I  would  not  feel  justified  in  saying  affirmatively 
that  that  is  a  wise  thing  to  do.  I  will  not  say  that  I  am  thoroughly 
satisfied,  beyond  doubt,  that  it  would  be  unwise.  It  is  a  very  large 
question,  and  it  is  particular!}^  large  when  you  come  to  look  at  the 
manner  in  which  these  combinations  are  going  on  all  the  time.  I 
should  think  the  railroad  people  would  regard  the  Commission  as 
wholly  incompetent  to  deal  with  such  a  question  as  that;  that  they 
would  hardly  be  able  to  get  along  with  it. 

Senator  Dolliver.  On  the  other  hand,  Judge  Logiin  prepared  a 
bill  which  was  jDending  before  the  committee  for  some  time 

Mr.  Clements.  Yes,  sir. 

Senator  Dolliver  (continuing).  ^ATiich  involved  that  exact 
scheme,  or  very  nearlj^  the  same  thing. 

Mr,  Clements.  Yes;  I  knoAv.  Pooling,  or  something  like  it,  has 
been  advocated  for  a  long  time.  Mr.  Tuttle  told  you  the  other  day 
that  pooling  was  no  longer  thought  of,  at  least  Iw  himself. 

Senator  Dolliver.  Professor  Ritchey  told  us  it  was  the  one  thing 
to  do. 

Mr.  Cle]\[ents.  Yes. 

Senator  Dolliver.  Public  ojoinion  seems  to  be  opposed  to  it. 

Mr.  Clements.  The  public  is  afraid  that  these  people  will  do  like 
other  peojile,  and  that  that  would  enable  them  to  get  more  than  if 
they  were  left  in  competition  with  each  other.  Now,  I  am  not  here 
to  arraign  the  railroad^.  These  gentlemen  are  elegant  gentlemen 
in  many  ways,  but  they  are  not  different  in  human  nature  from 
other  people,  and  when,  under  the  law,  you  can  lawfully  take  a 
profit,  most  people  are  disposed  to  take  it  by  lawful  methods.  It 
may  be  an  excessive  one,  but  whether  you  can  get  it  under  a  pro- 
tective tarifl'  or  under  a  railroad  adjustment,  or,  frequently,  under 
a  rebate,  people  are  tempted  to  take  it.  regardless  of  their  neighbors. 
They  do  not  regard  themselves  as  the  keepers  of  their  brothers  and 
neighbors  in  that  respect. 

In  regard  to  this  matter  of  capitalization  something  has  been  -aid, 
in  this  argument  on  behalf  of  the  widows  and  orphans.  I  see  a 
good  deal  of  data  has  been  put  in  here  from  time  to  time  showing 
the  distribution  of  railway  bonds  and  lailway  stocks,  and  some  gen- 
tlemen have  been  in  here  and  discussed  the  interests  of  people  who 
have  their  little  holdings  invested  in  these  things  as  a  kind  of  a 
savings  bank,  and  say  that  that  is  an  interest  which  must  be  looked 
after,  which  simply  means  that  they  must  look  after  that  property 
and  provide  against  its  confiscation  by  destroying  the  profits  and 
taking  away  the  interest  and  dividends,  which  is  a  perfectly  rational 
and  reasonable  thing  to  do.  Und()ul)tedly  a  rr.ilrond  onulit  to  be 
able  to  earn  enough  to  take  care  of  its  fixed  charges  and  to  earn  a 
reasonable  profit,  if  it  can  do  so,  whether  these  stocks  and  bonds  are 
held  in  the  hands  of  one  person  in  a  block  of  10,000  bonds  or  whether 
they  are  scattered  among  many  hands — whether  they  are  held  by 
widows  and  orphans  or  by  millionaires.  I  see  no  difference  in  the 
principle.  It  is  a  monstrous  proposition  that  if  property  is  held  by 
(me  or  two  millionaires  you  can  confiscate  it,  but  if  held  by  widows 
and  orphans  yon  can  not.     The  law  makes  no  such  distinction  as  that, 


120  REGULATION    OF    RAILWAY    RATES. 

and  the  presentation  in  itself  involves  the  theory  that  there  is  one 
rule  for  one  class  of  people  and  another  for  another. 

There  is  also  this  argument,  which  I  have  observed:  That  any- 
thing is  to  be  inferred  from  the  fact  that  a  lot  of  railway  conductors 
and  switchmen  and  railway  employees  of  various  sorts  have  sent  in 
petitions  protesting  against  this  power.  I  would  hardly  assume  that 
they  were  men  of  such  exact  knowledge  of  rate-making  conditions 
that  they  would  know  enough  about  this  branch  of  the  railway  busi- 
ness to.  afford  you  information.  They  simply  protest  that  if  you  rob 
the  railroad,  the  railroad  can  not  pay  them ;  and  if  you  let  the  rail- 
road make  an  excessive  profit,  then  it  can  pay  them  excessive  wages. 
I  hardly  think  the  law  takes  notice  of  anything  of  that  kind.  There 
is  no  principle  upon  Avhich  it  is  right  for  a  railroad,  a  railroad 
management,  or  the  railroad  employees  to  combine  against  the  con- 
sumers and  the  producers  of  this  country.  Wliat  is  right  is  fair  and 
just.  Beyond  that  it  makes  no  difference  whether  the  exaction,  if  it 
is  unjust,  is  taken  by  one  or  by  the  other  or  by  both,  and  distributed. 
There  is  no  soundness  in  that  principle. 

But  I  have  a  little  matter  here  that  I  want  to  call  to  your  attention, 
which  was  disclosed  in  the  proceedings  two  or  three  years  ago. 
The  railway  commission  of  Kentucky  presented  a  complaint  before 
the  Commission  which  called  for  the  investigation  of  the  acquisition 
of  the  Louisville  and  Nashville  Eailroad  by  Mr.  Gates.  That  came 
out,  at  least,  in  the  investigation.  It  appears  that  Mr.  Gates,  a  very 
activ^e  man,  had  gotten  hold  of  a  majority  of  the  stock  of  the  Louis- 
ville and  Nashville  Railroad  Company,  which  had  previously'  been 
held  and  controlled  by  the  Belmonts,  in  the  interest  of  others  whom 
they  represented,  and  it  disturbed  some  gentlemen  in  New  York  very 
much  to  think  that  Mr.  Gates  should  be  turned  loose  as  a  railroad 
man  in  the  South,  running  the  Louisville  and  Nashville  road.  The 
testimony  shows  that  Mr.  Gates  had  begun  to  buy  this  stock  of  the 
Louisville  and  Nashville  Railroad  at  about  110,  and  he  paid  as  high 
as  130.  It  was  said  that  he  paid  on  an  average  about  125  for  it.  It 
was  running  along  at  about  110  before  he  commenced. 

When  it  was  ascertained  that  he  had  a  majority  of  the  stock.  Mr. 
Morgan  was  able  to  get  Mr.  Schwab  to  go,  at  1  or  2  o'clock  at  night, 
to  his  hotel  and  wake  him  up  to  knoAv  upon  what  terms  he  could  get 
an  option  upon  that,  or  b^iy  it,  and  they  found  Mr.  Gates  and  got 
him  to  give  an  option  by  which  he  agreed  to  take  150  for  all  majority 
of  the  stock.  They  took  the  option  and  handled  it,  and  Mr.  Morgan 
called  up  the  president  of  the  Atlantic  Coast  Line  and  suggested  the 
situation  to  him,  and  the  outcome  was  that  the  Atlantic  Coast  Line 
agreed  to  take  it  at  150,  and  to  do  so  issued  $35,000,000  in  new 
bonds,  $8,500,000  in  new  stock,  to  the  former  stockholders — to  the 
then  stockholders— and  $5,000,000  of  stock  further.  That  resulted 
in  an  increase  of  the  bonds  and  stocks  of  the  Atlantic  Coast  Line:  a 
net  increase,  of  about  $50,000,000,  in  order  to  enable  the  Atlantic 
Coast  Line  to  take  the  control  of  the  Louisville  and  Nashville  Rail- 
road out  of  the  hands  of  Mr.  Gates.  Mr.  J.  Pierpont  Morgan  ex- 
pressed it  in  this  way  in  his  testimony : 

I  do  not  wish  to  impugn  any  man's  ability,  but  I  did  not  consider  that  Mr. 
Gates  was  a  proper  person  to  manage  the  LouiSAnlle  and  Nashville  Railroad. 

Mr.  Gates  was  perhaps  an  active  man,  and  he  might  indulge  in 
what  would  be  called  among  railroad  brethren  "  unreasonable  and 


REGULATION    OF    RAILWAY    RATES.  121 

rough  competition."  I  suppose  that  is  what  it  meant.  Pie  was  not 
wanted  in  that  family  of  railroad  men.  And  therefore  the  net  out- 
come was  that  the  Atlantic  Coast  Line  was  saddled  with  about 
$50,000,000  more  of  capitalization  in  order  to  get  Mr.  Gates  out  of 
the  way.  The  proj^erty  did  not  have  another  nail  driven  in  it,  or 
another  cross-tie,  or  any  more  rolling  stock,  or  any  stock  of  any  sort 
in  addition ;  but  when  you  talk  about  the  railroad  rates  of  the  Atlantic 
Coast  Line  and  the  increase  of  2  cents  on  lumber  Avhich  the  Atlantic 
Coast  Line  made  along  with  others,  the  Commission,  or  Congress,  or 
the  country  want  to  consider  that  $50,000,000  of  capitalization,  as 
well  as  that  j)art  of  the  capitalization  of  these  railroads  in  the  hands 
of  the  widows  and  the  orphans  who  have  put  in  their  little  savings 
into  these  securities.  And  when  you  consider  these  $50,000,000  worth 
of  bonds,  of  capitalization,  you  should  consider  that  the  bonds  be- 
come a  fixed  charge.     Interest  on  them  must  be  paid. 

That  is  just  one^little  case.  That  is  an  illustration  of  what  is  going 
on  and  has  been  going  on. 

Senator  Dollivek.  Would  you  suggest  an  investigation  of  the  issue 
of  new  securities  of  these  railroads  ? 

Mr.  Clements.  There  may  be  a  remedy  of  that  sort;  but  I  am 
making  an  answer  now  to  this  crj^  about  the  confiscation  of  bonds 
■and  stock,  and  the  confiscation  of  propert3\  and  so  forth.  I  think 
considerations  of  that  sort,  as  well  as  of  these  combinations  in 
restraint  of  trade  l)y  Avhich  rates  are  advanced  upon  agreement,  are 
legitimate  and  pertinent  considerations  when  you  come  to  consider 
the  reasonableness  of  a  rate;  because  the  law  has  left  competition  to 
fix  the  standard  of  reasonableness  in  respect  of  rates. 

Senator  Cullom.  If  it  will  ni^t  disturb  you,  will  you  be,  kind 
enough  to  tell  me  when  Mr.  Gates  sold  to  Mr,  Morgan,  on  what  date; 
and  also  when  did  jNIr.  Morgan  sell  ?  My  understanding  is  that  there 
was  considerable  time  between  those  transactions.  If  you  have  the 
dates  there,  I  would  like  to  have  them. 

Mr.  Cle^ients.  I  can  take  an  extract  from  the  testimony  taken  in 
that  case  and  send  it  to  you ;  but  I  could  not  give  vou  the  dates  here. 
It  is  somewhere  about  two  or  three  years  ago  that  that  was  heard. 
But  there  was  a  limit  on  the  option,  and  as  I  remember  the  testimony, 
the  whole  matter  was  fixed  up  before  the  option  ran  out. 

Senator  Cullom.  Mr.  Morgan  was  away,  I  think,  when  one  of  the 
transactions  took  place,  and  if  you  can  furnish  the  data  I  Avould  be 
glad  to  have  joii  do  it. 

Mr.  Cle3ients.  I  can  furnish  that.  It  was  some  couple  of  years 
ago,  I  think,  speaking  from  memory. 

Senator  Clapp.  Was  there  an  investigation  by  the  Commission? 

Mr.  Clements.  Of  this  matter? 

Senator  Clapp.  Yes. 

Mr.  Clements.  Yes,  sir. 

Senator  Clapp.  How  did  that  come  out? 

Mr.  Clements.  The  railroad  commission  of  Kentucky  instituted 
a  complaint  before  the  Interstate  Commerce  Commission  in  respect 
to  these  matters. 

Senator  Clapp.  "What  was  that  based  on  ?  I  am  simply  asking  for 
information. 

Mr.  Clements.  I  do  not  remember  now  all  the  grounds  on  which 


122  REGULATION    OF    RAILWAY    RATES. 

that  investigation  -was  based.  It  was  a  complaint  from  the  railroad 
commission  of  Kentiiclcy  to  the  Interstate  Commerce  Commission, 
and  I  should  say.  from  memory,  that  it  involved  the  allegation  of 
imreasonable  rates  brought  about  b}^  combinations.  There  was  a 
good  deal  said  in  the  case  about  some  combination  in  violation  of  the 
laws  of  Kentucky. 

Senator  Clapp.  Have  there  been  any  rates  changed? 

Mr.  Clements.  I  do  not  remember  about  that.  This  testimonj^  was 
brought  out  in  this  way :  ^Alien  the  railroads  answered  this  complaint 
made  by  the  Kentucky  commission  they  set  up  that  it  was  a  matter  not 
within  the  jurisdiction  of  the  Interstate  Commerce  Commission  to 
interfere ;  at  least  a  part  of  it. 

Senator  Cullo3i.  I  suppose  you  referred  to  it  more  because  it  was 
a  notable  transaction,  and  a  questionable  one,  than  with  a  view  to 
what  effect  it  would  have  upon  the  country  ? 

Mr.  Clements.  I  referred  to  it  simply  to  illustrate  how  it  is  that 
the  fixed  charges  can  be  increased,  and  the  public  must  meet  the  in- 
terest on  stocks  and  bonds  without  any  change  in  the  property,  and 
how  it  has  been  done  in  other  cases.  So  that  matters  have  gone  so  far 
that  it  is  not  safe  to  say  that  all  these  bonds  and  stock  represent  a 
bona  fide  investment,  entitled  to  earn  a  profit. 

And  I  want  to  say  in  reply  to  the  Senator  from  Minnesota  that 
both  the  railroads  when  they  answered  the  complaints  denied  the 
power  of  this  Commission  to  investigate  the  matter.  I  do  not  know 
whether  that  went  to  the  whole  complaint,  but  it  certainly  did  to  a 
part  of  it.  and  possibly  to  all  of  it.  But  when  we  met  to  take  it  up, 
one  by  one  they  withdrew  that.  Mr.  Stetson,  I  think,  and  some  of 
these  others,  said  that  they  withdrew  it,  and  they  represented  some  of 
them,  and  they  would  be  glad  to  disclo'se  everj'thing  about  the  mat- 
ter, and  Mr.  Baxter,  representing  the  Southern,  said  the  same  thing, 
so  that  the  testimony  was  given  by  common  consent.  I  referred  to 
it  not  for  the  purpose  of  impugning  these  men.  They  conducted 
what  they  considered  a  lawful  transaction  as  the  law  stands.  I 
spoke  of  it  to  show  how  the  competition  goes  on  in  one  form  and  an- 
other, but  the  competition  is  more  or  less^  diminishing,  and  therefore 
the  greater  the  necessity  of  some  sort  of  efficient  regulation  of  rates. 

Senator  Clapp.  What  have  you  to  tell  us  about  what  use  was  made 
of  that  ? 

Mr.  Cle:ments.  The  Commission  did  not  pursue  it.  They  stated 
that  they  wanted  to  take  it  up  again  at  Louisville,  but  they  never  did 
it,  and  the  matter  Avas  left  in  that  form. 

Senator  Xewlands.  Do  you  think  it  would  be  wise  to  provide  that 
stock  and  bonds  of  railroads  engaged  in  interstate  commerce  should 
have  to  be  approved? 

Senator  Clapp.  I  would  suggest  that  that  has  not  been  brought  up 
by  the  witness,  and  accoi'ding  to  our  agreement.  I  think  we  ought  to 
confine  our  inquiry  to  what  lie  brings  out  at  this  stage,  and  bring 
these  things  up  later.  . 

Senator  Neavlanos.   I  think  that  it  is  pertinent. 

Senator  Clapp.  It  is  pertinent,  but  we  had  agreed  to  take  these 
things  up  later.     Of  course,  it  is  perfectly  pertinent. 

Senator  Xewlands.    Very  well. 

Mr.  Clements.  That  happens  to  be  a  subject  of  larger  dimensions, 


KEGULATION    OF    RAILWAY    RATES.  123 

which  I  did  not  come  here  to  discuss,  but  I  am  perfectly  willing  to 
answer  anything  that  I  can  on  it.  On  this  subject  of  consolidation, 
etc.,  I  have  some  figures  here  further  illustrating  the  processes  by 
which  it  goes  on  steadily,  and  I  have  taken  this  simply  because  it  is 
a  striking  illustration  of  the  same  consolidation  and  combination 
which  must  affect  the  limitation  on  competition.  The  Pennsylvania 
Railroad  has  $296,504,550  in  stock,  and  the  Pennsylvania  Company, 
$40,000,000;  the  Baltimore  and  Ohio  Railroad  Company,  $184,000,- 
000 ;  the  Chesapeake  and  Ohio,  $62,000,000 ;  the  Norfolk  and  Western, 
$89,000,000;  the  Philadelphia,  Baltimore  and  Washington  Railroad, 
$23,000,000;  the  -Northern  Central  Railroad  Company,  $11,000,000. 
I  am  merely  giving  you  the  round  numbers  here  without  the  odd 
dollars. 

Senator  Kean.  Is  this  the  capitalization  of  the  Pennsjdvania  Rail- 
road? 

Mr.  Clements.  It  is  the  capitalization  of  these  roads. 

There  are  a  great  many  other  railroads  in  the  Pennsylvania  System. 
I  am  only  speaking  of  these  important  lines.  This  includes  the 
Pennsylvania  Railroad  Company  and  the  Pennsylvania  Companj^,  the 
Baltimore  and  Ohio  Railroad  Company,  the  Norfolk  and  Western, 
the  Chesapeake  and  Ohio,  the  Philadelphia,  Baltimore  and  AVashing- 
ton,  and  the  Northern  Central.  I  have  limited  these  to  this  number 
because  they  are  very  conspicuous  and  important  roads  and  illustrate 
the  manner  in  which  these  holdings  are  interlocked,  so  to  speak,  with 
these  different  roads.  Of  the  stock  of  the  Pennsylvania  Company 
the  Pennsylvania  Railroad  Company  owns  all — $40,000,000.  Of  the 
stock  of  the  Baltimore  and  Ohio  Railroad  Companj^,  which  is  $184,- 
000,000,  the  Pennsvlvania  owns  $51,000,000  and  the  Pennsylvania 
Company  $16,000,000,  the  Philadelphia,  Baltimore  and  Washing- 
ton Railroad  Company  owns  $1,781,000.  and  the  Northern  Central 
Railroad  Companj^  owns  $1,781,000.  Of  the  Chesapeake  and  Ohio 
Railroad  Company,  which  is  $62,000,000,  the  Pennsylvania  Railroad 
owns  $10,000,000,  \he  Pennsylvania  Company  $4,000,000,  the  North- 
ern Central  Railway  Company  $1,500,000.  Of  the  stock  of  the  Nor- 
folk and  Western  Railroad  Company,  which  is  $89,000,000,  the  Penn- 
sylvania Railroad  Company  owns  $25,000,000,  the  Pennsylvania 
Company  $26,500,000,  the  Northern  Central  Company  $1,500,000; 
and  of  the  stock  of  the  Philadelphia,  Baltimore  and  Washington 
Railroad  Company,  which  is  $23,000,000,  the  Pennsylvania  Railroad 
Company  owns  $23,000,000,  with  some  odd  figures — practically  all. 
The  Northern  Central  owns  $352,000.  The  Pennsylvania  Company 
owns  $9,000,000.     I  have  left  off  the  odd  figures  generally. 

Now,  among  the  persons  who  are  on  boards  of  directors,  one  person, 
who  is  on  the  Pennsylvania  Railroad  Company's  board  of  directors, 
is  on  24  different  boards  of  directors.  Another  person  is  on  17  boards, 
and  so  on.  Some  of  these  directors  are  on  practical!}^  all  of  these 
boards  of  directors.  For  instance,  Mr.  Barnes  is  on  the  directorship 
of  the  Norfolk  and  Western  road,  the  Baltimore  and  Ohio,  the  Penn- 
sylvania Company,  and  the  Pennsylvania  Railroad  Compiiny,  b".t 
not  on  the  Chesapeake  and  Ohio.  Mr.  McRae  is  on  the  Pennsylvania 
Company,  the  Pennsylvania  Railroad  Company,  the  Baltimore  and 
Ohio,  and  the  Norfolk  and  Western.     And  so  it  goes.     I  have  these 


124:  REGULATION    OF    RAILWAY    RATES. 

statements,  which  illustrate  how  the  management  of  these  roads  is 
in  the  hands  of  the  same  men. 

Senator  Kean.  Do  you  intend  to  put  those  statements  in  ? 

Mr.  Clejnients.  Yes ;  I  will  put  them  in  if  they  are  acceptable. 

Senator  Kean.  Those  are  very  well  managed  properties,  I  pre- 
sume ? 

Mr.  Clements.  T  presume  so.  I  am  not  questioning  that.  But  I 
think  it  is  a  legitimate  inference  that  when  the  same  or  many  of  the 
same  people  are  on  the  boards  of  directors  of  each  one  of  these  roads, 
or  all  but  one,  that  they  are  not  as  likely  to  indulge  in  competition  with 
one  another  as  they  were  when  they  were  separate  "and  distinct  and 
independent.     That  seems  to  be  a  reasonable  inference. 

Senator  XEWiiVNos.  Hence  you  would  not  expect  any  reduction  to 
take  place  by  competition  such  as  has  hitherto  taken  place? 

]Mr.  Clements.  That  is  exactly  the  issue  that  I  make  in  these 
things;  that  is  what  I  call  to  your  attention.  I  see  Senator  Gor- 
man is  on  one  of  these,  as  well  as  another  gentleman,  whose  name  I 
can  not  find  here  now. 

Senator  Kean.  Is  Senator  Gorman  on  there  for  the  State  of  Mary- 
land, as  a  State  director? 

Mr.  Cle^ients.  Mr.  Gorman  and  one  other  man  are  here  as  repre- 
sentatives of  the  State  of  Maryland.  That  Avas  what  I  was  proceed- 
ing to  state.  I  wanted  to  state  the  fact  in  the  record.  They  are 
there  as  representatiA'es  of  the  State  and  not  in  any  personal  ca- 
13acit3^ 

Senator  Kean.  You  think  that  the  service  to  the  public  of  the 
Pennsylvania  Railroad  is  good? 

Mr.  Clements.  Good  ? 

Senator  Kean.  Yes. 

Mr.  Clements.  They  have  undoubtedh"  good  service.  I  think  they 
complain  at  times  that  they  are  very  greatly  congested  and  need  more 
rolling  stock,  and  I  know  at  times  they  have  been  so.  But  I  am  not 
making  any  contest  here  that  they  do  not  render  good  service,  and  I 
am  not  making  any  contest  for  the  confiscation  of  these  stocks  or 
bonds  or  trying  to  impugn  any  man  here  because  he  is  on  two  or  three 
of  these  boards.  That  is  under  the  law,  and  I  suppose  that  it  is  legiti- 
mate ;  but  I  am  speaking  of  it  as  a  continuous  and  a  growing  condition 
which  tends,  as  every  man  must  recognize,  I  think,  to  the  limitation 
of  competition  upon  which  the  public  is  supposed  to  rely  for  protec- 
tion against  unreasonable  and  extortionate  rates.  We  are  constantly 
told  in  these  hearings  that  there  is  no  danger  of  the  railroads  putting 
on  excessive  rates,  for  several  reasons.  In  the  first  place,  because  it  is 
against  their  interest  to  do  it :  in  the  second  place,  because  the  force 
of  competition  is  such  that  it  is  practically  impossible  to  do  it  any- 
how. Now,  the  Senator  from  New  Jersey  called  my  attention  when 
I  commenced — and  I  intended  to  speak  of  it  soon — to  this  statement 
found  in  a  report  made  by  the  Commission  in  a  case  concerning 

Senator  Kean.  Strawberries? 

Mr.  Clements.  {Strawberries :  yes,  sir. 

Senator  Kean.  Rates  from  Florida? 

Mr.  Clements.  Yes.  This  was  reported  by  Commissioner  Yeazey, 
and  in  that  report  it  is  said : 


REGULATION    OF    RAILWAY   RATES.  125 

Notwithstanding  the  Commission  has  held  from  the  time  of  its  organization 
to  the  present  time  that  the  statute  reqiiires  it  to  ascertain  and  determine  what 
the  reasonable  maximum  rate  is,  on  a  comphiint  alleging  violation  by  reason 
of  excessive  freight  charges,  yet  some  carriers  continue  to  deny  the  soundness 
of  this  view  of  the  law.  But  under  the  renewed  presentation  of  this  argument, 
it  still  seems  plain  to  us  that  regardless  of  where  the  general  i>ower  to  estab- 
lish rates  may  be  lodged,  the  ascertainment  of  a  reasonable  rate  where  extor- 
tion is  charged  necessarily  involves  the  determination  of  how  much  an  existing 
rate  is  in  excess  of  what  is  reasonable. 

Senator  Kean.  That  was  in  1892. 

Senator  Newlands.  What  case  is  that? 

Senator  Kean.  That  was  the  Strawberry  Case. 

Mr.  Clements.  Decided  in  January,  1892.  That  was  a  complaint 
made  before  I  was  a  member  of  the  Commission.  I  was  only  calling 
your  attention  to  that  case  because  of  the  statements  that  have  been 
made  as  to  whether  or  not  that  power  of  the  Commission  had  been 
questioned  prior  to  the  statement  of  Mr.  Morrison.  I  want  to  print 
what  Mr.  Slorrison  said  in  here.  AATiat  the  Commission  said  was 
written  and  jjenned  by  Mr.  ISlorrison,  and  I  want  you  to  understand 
that  thoroughly,  that  i\[r.  Morrison  did  not  say  that  nobody  ques- 
tioned its  power.  AYhat  he  said  was  that  no  member  of  the  Commis- 
sion ever  officially  expressed  any  other  view  or  ever  failed  to  join  in 
the  action  which  was  taken,  beginning  with  the  case  which  was  com- 
menced the  second  month  after  the  Coinmission  was  organized,  and 
as  to  that,  no  railroad  company  filed  in  any  answer  a  contest  about 
this  question  for  the  first  ten  years  that  the  Commission  was  rumiiiig. 
That  there  was  some  argument  and  talk  here  and  there  about  it  I 
have  not  denied,  of  course. 

Senator  Clapp.  The  time  has  come  for  adjournment  now.  We  can 
not  get  through  with  you  before  dinner  this  evening,  Mr.  Clements, 
so  we  will  take  a  recess,  and  if  it  suits  your  convenience  and  that  of 
the  Commission  we  will  be  pleased  to  hear  you  further  at  11  o'clock 
to-morrow  morning. 

Mr.  Cle]n[ents.  I  thank  you.  I  have  but  little  more  to  say,  and 
I  will  be  here  then. 


Saturday,  May  20^  1905. 
CONTINUATION  OF  STATEMENT  OF  HON.  JUDSON  C.  CLEMENTS. 

Senator  Cullom  (in  the  chair).  You  may  proceed,  Mr.  Clements. 

Mr.  Clements.  Mr.  Chairman  and  2:entlemen  of  the  committee, 
when  the  adjournment  was  held  yesterday  afternoon  I  had  referred  to 
some  papers  relative  to  the  ownership  by  different  railroad  companies 
of  the  stock  in  others.  I  had  gone  through  with  the  papers  and  was 
asked  by  a  member  of  the  committee  to  put  them  in.  By  accident  I 
got  hold  of  them  and  took  them  away  with  my  other  papers.  I  sim- 
ply want  to  present  these  papers  in  connection  with  my  statement 
yesterda}'  afternoon. 

Senator  Cullom.  They  will  be  considered  a  part  of  your  remarks 
and  go  in. 


126  EEGULATION    OF    RAILWAY   EATES. 

Report  for  the  year  ending  June  30,  1904. 

Capital  stock  outstanding : 

Pennsylvania  Railroad  Company- $296,504,550 

Pennsylvania  Company   40,000,000 

Baltimore  and  Ohio  Railroad  Company 184,244,812 

Chesar>eake  and  Ohio  Railway  Company 62,799,400 

Norfolk  and  Western  Railway  Company. 89,000,000 

Philadelphia,  Baltimore  and  Washington  Railroad  Company__  23,494.575 

Northern  Central  Railway  Company 11,462,300 

Of  the  stock  of  the  Pennsylvania  Company 40.  000.  000 

Pennsylvania  Railroad  Company  owned 40,000.000 

Of  the  stock  of  the  Baltimore  and  Ohio  Railroad  Company 184,  244,  812 

Pennsylvania  Railroad  Company  owned 51,773,300 

Pennsylvania   Company   owned 16,044,600 

Philadelphia.  Baltimore  and  Washington  Railroad  Company 

owned 1,  781,  500 

Northern  Central  Railway  Company  owned 1.781,500 

Of  the  stock  of  the  Chesapeake  and  Ohio  Railway  Company 62,  799,  400 

I'ennsylvania  Railroad  Company  owned 10,130.000 

Pennsylvania  Company  owned 4,000,000 

Northern  Central  Railway  Company  owned 1.500,000 

Of  the  stock  of  the  Norfolk  and  Western  Railway  Company 89,  000.  000 

Pennsylvania  Railroad  Company  owned 25,830,000 

Pennsylvania  Company  owned 6,500,000 

Northern  Central  Railway  Company  owned 1,500,000 

Of  the  stock  of  the  Philadelphia,  Baltimore  and  Washington  Rail- 
road Company   23,494,575 

Pennsylvania  Railroad  Company  owned 23,132,200 

Northern  Central  Railway  Companv  owned 352.200 

Of  the  stock  of  the  Northern  Central  Railway  Company 11,  462.  300 

Pennsylvania  Railroad  Company  owned 9,401,950 

?tarnes  of  persons  on  the  board  of  directors  of  more  titan  6  railivaij  companies. 

Boards. 

Oreen.  John  P 24 

McC)-ea,  James , 17 

Rea,  Samuel  17 

Shortridge.  N.  P 16 

AVoods,  Jose]»h  16 

Turner,  J.  J 14 

Barnes,  W.  H 14 

Tavlor,  E.  B - 13 

Pugh,  Chas.  E 12 

Wood,  George 9 

Cassatt,  A.  J 8 

Prevosc,  S.  M S 

Morris,  E.  B 7 

It  apjwars  that  the  members  of  the  boards  of  directors  of  certain  railway  com- 
panies, mostly  in  tlie  Pemisylvania  Railroad  system,  as  given  in  their  reports 
for  the  year  ending  June  30,  1904,  aggregated  395.  An  analysis  of  this  number 
*>hows  that : 

157  directorships  were  held  liy  157  persons  on  1  board  only. 

63  directorships  were  held  by  26  persons  on  from  2  to  5  boards. 

375  directorships  were  held  by  13  persons  on  more  than  5  boards,  distributed 
as  follows : 

1  person  held 24 

1  i)ersou  held IJ 

1  person  held 7 ^1 

1  person  held !■'' 

1  person  held 1^ 

1  person  held ^"^ 

1  person  held 1* 


REGULATION    OF    EAILWAY   EATES. 


127 


1  person  held 13 

1  person  held 12 

1  persoji  held 0 

1  person  held S 

1  person  held--. S 

1  person  held 7 

13  persons  held 175 

Names  of  the  directors  of  the  Pennsylvania  Railroad  Company,  Pennsylvania 
Company,  Baltimore  and  Ohio  Railroad  Company.  Chesapeake  and  Ohio  Rail- 
loay  Company,  and  Norfolk  and  Western  Ralicay  Company,  as  given  in  their 
annual  reports  for  the  year  ending  June  30,  lOO'f. 


Pennsylvania  R.  R. 
Co. 


Barnes,  Wm.  H 


Cassatt,  Alexander 
J. 


Cuyler.T.DeWitt. 


.Ellis,  Rudolph  . . .  . 
Fox,  Alexander  M . 


Godfrey,  Lincoln. 

Green,. John  P 

Griscom,  Clement  A 


Little ,  Amos  R 

McCrea,  James 

Morris,  Effingham 
B. 


Patterson, C.  Stuart 

Prevost,    Suther- 
land M. 
Pugh,  Charles  E-... 
Rea.  Samuel 


Shortridge,  N.  Par- 
ker. 


Wood,  George 


Pennsylvania  Co. 


Baltimoi'e  and  Ohio 
R.  R.  Co. 


Barnes,  Wm.  H 


Cassatt,  A.  J 


Green, John  P. 


McCrea,  James .. 
Morris,E.B 


Patterson,  C. 
Stuart. 


Pugh,  Charles  E 
Rea,  Samuel 


Shortridge,  N.  P. 


Taylor,  Edw.  B 
Turner,  J.  J 


Wood,  George 
Wood,  Joseph- 


Bacon,  Edward  R 


Baughman,  L.  Vic- 
tor. 


Cowen.  John  K. 


Chesapeake  and 
Ohio  Rwy.  Co. 


Axtell,  Decatur . 


Gorman,  Arthur  P 


Green,  John  P- 


Harriman.       Ed- 
ward H. 


McCrea,  James. 


Depew,    Chaun- 
cey  M. 


Green, John  P. 


Norfolk  and  West- 
ern Rwy.  Co. 


Newman,  Wm.  H 


Prevost,    Suther-     Prevost,  S.M 
land  M. 


Rea,  Samuel Rea,  Samuel 

Ream.NormanB _ 

SchiflE,  Jacob  H 


Speyer,  James  . 
Steele,  Charles . 


Stillman,  James. 


Stevens,  Geo.  W 


Twombly,    H. 

McK. 
Wickham.H.T.. 


Barnes,  Wm.  H. 
Doran,  Joseph  I. 

Fink,  Henry. 

Green,  John  P. 

Johnson,  L.E. 
McCrea,  James. 


Morawetz,    Vic- 
tor. 


Prevost,  S.M. 
Rea,  Samuel. 


Shortridge,    N. 
Parker. 


Taylor,  WalterH. 


Senator  Kean.  Before  we  proceed,  I  want  to  call  attention  to  an 
error  in  the  record  of  yesterday.  At  the  top  of  page  93  the  atten- 
tion of  Judge  Clements  was  called  to  what  was  known  as  the  "  Straw- 
berry Case."    It  reads,  "  That  was  in  1902."    It  should  be  1892. 

Mr.  Clements.  The  date  was  1892.    That  is  correct. 

Senator  Kjean.  I  would  like  to  have  that  correction  made, 

Mr.  Clements.  In  connection  with  this  same  question  of  issuing 
bonds  and  owning  bonds  and  stocks  of  one  company  by  another,  it 


128  EEGULATION    OF   RAILWAY   RATES. 

was  developed  in  the  investigation  of  the  Northern  Securities  scheme 
that  the  stock  of  the  Chicago,  Burlington  and  Quincy  road  was 
taken  over  at  the  rate  of  2  for  1  by  the  Great  Northern  and  the 
Northern  Pacific,  and  they  were  to  issue  bonds  and  make  mortgages 
on  those  roads  to  the  amount  necessary  to  take  the  stock  of  the 
Burlington  at  that  rate.  There  was  a  large  increase  proposed  at 
that  time  by  that  plan  of  making  an  annual  fixed  charge  to  pay  the 
interest  on  those  bonds  that  were  put  upon  those  northern  roads  in 
order  to  acquire  the  stock  of  the  Burlington  at  a  very  handsome  price. 

I  do  not  wish  to  dwell  upon  this  particular  question  any  further 
in  that  line  or  extend  the  discussion  further,  but  I  Avish  again  to  say, 
as  I  did  yesterday  in  referring  to  those  matters  of  ownership  by 
one  road  in  the  stock  of  another,  and  these  directorships  where  one 
person  is  on  the  board  of  directors  of  a  half  dozen  or  dozen  or  twenty 
roads,  that  the  whole  purpose  of  it  is  to  indicate  the  process  and  trend 
of  the  present  condition  in  respect  to  amalgamation  and  community 
of  interest,  resulting  in  the  elimination  of  competition,  which  has 
interfered  with  the  right  of  the  public  to  be  protected  against  extrava- 
gant and  unreasonable  rates. 

This  is  no  personal  matter.  If  it  is  lawful  for  the  gentlemen  to 
do  it,  they  are  within  the  law,  and  I  do  not  say  that  it  is  or  is  not. 
I  am  not  talking  of  men.  The  Senator  from  Ncav  Jersey  asked  me 
if  the  Pennsylvania  road,  to  which  reference  was  made,  was  not  well 
managed.  Of  course  it  is  well  managed.  There  is  no  better  managed 
road  in  the  country.  I  am  not  making  any  attack  upon  the  Pennsyl- 
vania road  or  upon  any  man  whose  name  appears  in  these  papers.  It 
is  not  a  question  of  men ;  it  is  a  question  of  conditions.  That  is  all 
the  reference  I  have  made  to  these  matters,  and  that,  I  think,  is  j)erti- 
nent  in  connection  with  the  question  as  to  whether  the  public  is  fully 
protected  now  as  against  unreasonable  rates. 

I  must  pass  on.  I  do  not  intend  to  extend  my  talk  much  further 
this  morning. 

I  was  asked  to  state  some  dates  in  respect  to  another  matter  to 
which  I  referred  yesterday — that  was  a  transaction  between  the 
Atlantic  Coast  Line  and  the  Louisville  and  Nashville  road.  I  have 
taken  from  the  record  in  that  case  this  quotation  from  the  testimony, 
which  I  think  covers  the  question  the  chairman  asked  me  j^esterday 
to  cover  by  information  this  morning : 

IVIr.  Gates :  First  besiui  to  acquire  the  stock,  "  I  think,  in  March."  Last  stock 
which  entered  into  tlie  transaction  bought  between  the  "  7th  and  10th  of  April." 
Mr.  Schwab  "  came  to  my  hotel  and  woke  me  up  at  2  or  3  o'clock  in  the  morn- 
ing "  the  9th.  10th,  or  11th  of  April.    Option  given  April  15,  1902. 

Mr.  Erwin  :  On  or  about  December  1,  scrip  representing  306,000  shares  of 
Louisville  and  Nashville  stock  was  delivered  to  the  Atlantic  Coast  Line  Rail- 
road Company. 

Those  dates  I  think  cover  the  information  asked  for  yesterday 
respecting  the  beginning  and  end  of  that  transaction. 

I  was  also  asked  to  present,  as  an  appendix,  the  hearing  of  the  Milk 
Case,  to  which  reference  has  been  repeatedly  made.  That  I  have  this 
morning. 

The  paper  referred  to  was  ordered  to  be  printed  as  Appendix  H. 

Senator  Kean.  Has  the  Atlantic  Coast  Line  presented  any  com- 
plaint to  the  Interstate  Commerce  Commission  for  violations  of  the 
interstate-commerce  act? 


EEGULATION   OF   EAILWAY   BATES.  129 

Mr.  Clements.  I  can  not  tell  you  the  details  of  that  complaint. 
It  was  presented  by  the  board  of  railroad  commissioners  of  the  State 
of  Kentucky,  and  they  were  represented  by  the  attorney-general  of 
Kentucky.  As  I  remember  it,  there  was  some  allegation  of  combina- 
tion in  restraint  of  trade,  in  violation  of  the  law.  Whether  or  not 
there  was  complaint  of  rates  I  had  no  opportunity  to  ascertain  last 
night  after  I  left  the  committee  room. 

Senator  Ivi:an.  But  the  Commission  occupied  a  good  deal  of  time 
in  that  case. 

Mr.  Cle^ments.  "We  occupied  a  few  days  in  New  York,  and  when 
we  quit  there  it  was  with  the  understanding  that  we  would  be  re- 
quested to  go  to  Louisville  to  take  further  testimony;  but  we  never 
went,  and  the  matter  never  went  any  further.  If  the  Senator  has 
reference  to  the  question  Avhether  the  matter  involved  there  ^as  one 
within  the  jurisdiction  of  the  Interstate  Commerce  Commission,  I 
am  free  to  say  that  I  have  always  had  the  impression  that  it  was 
quite  doubtful  whether  it  was  or  not. 

Senator  Ke.vn.   I  am  under  the  impression  also. 

Mr.  Clements.  We  were  not  called  upon  to  pass  on  that  question, 
for  the  reason  that,  although  the  respondents  raised  that  question, 
when  we  heard  the  case  they  withdrew  all  objections  and  said  they 
would  present  the  witnesses,  Mr.  Stetson  and  Mr.  Baxter  represent- 
ing the  road,  so  that  what  was  done  was  done  without  question,  by 
common  consent,  so  to  speak. 

Senator  Kean.  I  was  only  looking  at  it  in  the  way  of  taking  up  the 
time  of  the  Commission. 

Mr.  Cle:ji:ents.  The  Commission  hardly  felt  at  liberty  to  refuse  the 
State  of  Kentucky,  as  it  Avas  represented  by  its  commission  and  at- 
torney-general, to  hear  what  they  had  to  say  about  the  case  at  least, 
and  see  whether  they  could  present  a  case  or  not.  Besides  that,  by 
the  twelfth  section  of  the  act  to  regulate  commerce  the  Commission 
is  required  to  keep  itself  informed  with  respect  to  these  general  mat- 
ters and  to  make  recommendations  from  time  to  time.  I  concur  in 
some  of  the  statements  I  have  seen  from  time  to  time,  to  the  effect 
that  probably  some  of  the  most  effective  good  that  has  been  accom- 
plished has  been  by  these  public  investigations  held  before  the  Com- 
mission and  the  publicity  that  has  resulted. 

Senator  Kean,   I  agree  with  you  on  that. 

Mr.  Clements.   I  am  glad  to  hear  that. 

It  was  said  a  few  days  ago  that  the  Commission  in  1891,  in  the 
Social  Circle  Case,  upon  the  testimony  of  a  single  witness,  undertook 
to  reduce  the  rate  on  first-class  goods  from  Cincinnati  to  Atlanta, 
which  would  result  in  other  changes,  and  it  is  only  fair  to  say  that 
that  was  the  case  that  went  to  the  Supreme  Court.  It  was  a  long 
and  short  iiaul  case,  as  Avell  as  involving  a  complaint  of  the  rate  to 
Atlanta.  But  it  leaves  an  unfair  impression  to  say  that  the  Com- 
mission, on  the  testimony  of  one  witness,  reduced  the  rate  or  under- 
took to  reduce  it  a  cent  below  the  rate  that  that  witness  said  was  a 
reasonable  rate.  That  was  another  case  that  was  prepared  and  de- 
cided before  I  came  on  the  Commission.  Colonel  Morrison  handled 
that  case,  and  the  report  bears  his  name. 

The  other  facts  of  the  case  pertinent  to  that  question  for  a  fair 

74lA— 05 9 


130  REGULATIOiSr    OF    RAILWAY   RATES. 

understanding  are  that  the  through  rate  from  Cincinnati  to  Augusta, 
170  miles  be3'ond  Atlanta,  was  $1.07;  the  rate  to  Social  Circle  and 
intermediate  points  was  $1.37,  as  I  understand;  the  rate  to  Atlanta 
was  $1.07,  the  same  as  to  Augusta ;  the  rate  to  intermediate  points 
was  the  through  rate  to  Atlanta  plus  the  local  rate  from  Atlanta. 
The  Commission  did  not  undertake  to  disturb  the  rate  to  interme- 
diate points.  The  one  witness,  to  which  reference  was  made  as  being 
"  the  one,"  was  the  vice-president  of  the  Cincinnati,  New  Orleans 
and  Texas  Pacific,  otherwise  called  the  Cincinnati  Southern  road, 
from  Cincinnati  to  Chattanooga,  which  covered  two-thirds  of  the 
entire  through  route  from  Cincinnati  to  Atlanta.  That  was  the 
sworn  testimony  of  the  vice-president  of  that  road.  It  is  only  fair 
to  say  that  although  there  was  but  one  witness  that  one  witness  was 
the  vice-president  of  the  road  covering  two-thirds  of  the  distance. 
But  the  rate  of  $1.07  to  the  point  170  miles  farther  was  another  perti- 
nent fact  of  which  the  Commission  took  cognizajice. 

I  have  nothing  further  I  wish  to  say  about  that  case,  but  it  is  only 
fair  to  say  that  the  person  who  was  that  •'■  one  witness  "'  should  be 
known  as  a  railroad  man  operating  that  line  two-thirds  of  the  dis- 
tance. His  testimony  was  taken  as  in  the  nature  of  an  admission  as 
to  what  was  reasonable. 

Some  questions  were  referred  to  yesterday  in  respect  to  this  case, 
out  of  which  the  Maximum  Rate  Case  grew,  and  I  neglected  to  say, 
as  I  intended  to  do,  that  not  long  since  the  rates  were  reduced  b}'  the 
carriers  themselves  from  $1.07  from  Ohio  River  points  to  Atlanta  as 
a  representative  point.  The  old  rate  having  been  $1.07,  it  has  been 
reduced  to  98  cents,  and  only  three  or  four  days  since  there  has  gone 
into  effect  a  reduction  from  Chicago  to  the  Ohio  River  to  the  amount 
of  5  cents  on  first-class  and  relative  reductions  on  the  other  classes. 
So  that  the  carriers  themselves  have  at  last  moved  a  long  way  in  the 
direction  the  Commission  then  found  or  directed  or  ordered  that 
they  should  do.  It  is  true  a  good  many  j^ears  have  elapsed,  but 
there  has  been  a  substantial  moA^ement  by  them  in  that  direction. 

It  may  be  said  that  this  was  not  altogether  voluntary.  The  Geor- 
gia railway  commission  undertook  to  make  some  rules  and  regula- 
tions last  year,  or  in  the  early  part  of  this  J^ear,  which  resulted  in 
an  application  for  an  injunction  by  the  railroads  against  that  com- 
mission to  enjoiii  a  revision  of  rates  going  into  effect  in  the  State. 
Out  of  that  grew  a  conference  and  compromise,  the  result  of  which 
was  that  the  railroads  undertook  to  and  did  reduce  rates  first  from 
eastern  points  and  then  from  western  points  all  through  that  ter- 
ritor}^  Of  course,  the}'  filed  the  injunction  upon  the  theory  that 
the  rates  were  already  low  enough  and  ought  not  to  be  reduced. 
They  compromised  that,  and  the  commission's  case  was  taken  out  of 
court.  If  it  be  said  that  the  contention  of  the  railroads  was  right; 
that  the  rates  were  already  as  low  as  they  ought  to  be,  and  that  there 
was  then  a  compromise,  it  only  illustrates  what  I  said  yesterday, 
that  a  large  city  backed  by  a  State  commission  and  by  influences — 
newspaper,  public  opinion,  and  otherwise — can  be  focalized  so  as 
to  induce  them  to  do  a  thiug  of  this  kind.  Perhaps  an  individual 
or  a  hamlet  or  small  town  would  not  be  able  to  bring  about  such  a 
result  as  that.  It  is  one  way  or  the  other.  The  rates  before  this 
change  was  made  were  either  proper  or  improper.     If  they  have 


REGULATION    OF    RAILWAY   RATES.  131 

been  forced  into  a  reduction  of  them  without  due  reason  and  cause. 


by  the  potency  of  the  influence  behind  them,  then  in  order  to  get 
justice  or  in  order  to  get  rates  reduced  there  must  be  some  such 
opinion  as  that  which  can  not  be  brought  to  bear  by  every  man  in 
every  communitv  and  every  town.  If  it  was  right  on  the  merits  of 
the  proposition,  it  ought  to  have  been  done  without  that  sort  of  pro- 
ceeding, and  perhaps  might  have  been  done  some  time  between  this 
and  the  years  ago  when  this  matter  was  up  before. 

Senator  Cullom.  A  new  condition  of  affairs  has  been  brought 
about  in  the  meantime  so  as  to  justify  it  now,  when  it  might  not 
have  been  so  before. 

Mr.  Clements.  Of  course,  there  can  be  a  great  many  changes.  The 
Commission  then  said  there  had  been  great  changes  in  the  then  exist- 
ing conditions  from  what  they  wore  when  that  basis  of  rates  was  orig- 
inally fixed,  and  that  the  density  of  traffic  had  increased  on  these 
roads.  All  of  that  was  taken  into  account  and  discussed,  and  given 
among  the  reasons  for  the  finding  and  conclusion  of  the  Commission 
in  that  case.  I  hardly  think  that  iustice  can  be  done  to  a  full  con- 
sideration  of  that  case,  if  it  is  to  be  gone  into  without  having  the  full 
report  that  was  made  at  the  time  about  it. 

It  has  been  said  here  that  the  Commission  hardly  assigned  any 
reasons  for  what  it  did.  The  reasons  are  all  set  forth  there,  compari- 
sons and  costs,  so  far  as  the}^  could  be  ascertained.  Changed  condi- 
tions may  have  been  due  to  the  increased  volume  and  density  of 
movement  over  those  roads  which  had  grown  up,  and  all  those 
changed  conditions  have  gone  on  since  the  original  basis  was  made. 

Senator  Newlands.  In  that  case  did  you  take  into  consideration 
any  of  the  elements  spoken  of  by  the  Supreme  Court,  as  to  value 
of  the  road  and  fair  return  upon  capital  invested  ? 

Mr.  Clements.  We  undertook  to  do  that  as  well  as  we  could  with 
the  facts  before  us,  in  resjDect  to  the  earnings  per  ton  per  mile,  the 
increase  in  density  of  business,  and  all  those  things. 

Senator  Newlands.  Do  you  find  that  practicallj^  any  rule  of  ad- 
justing, with  the  considerations  referred  to  by  the  Supreme  Court, 
can  be  held  in  view  ? 

Mr.  Clements.  It  is  very  difficult  to  give  a  practical  application 
of  some  of  these  matters  in  any  case.  I  think  it  is  said,  among  other 
things,  that  regard  must  be  had  to  the  value  of  the  property,  and  per- 
haps to  the  value  of  bonds  and  stock  and  the  earning  capacity  of 
the  road  and  all  that.  Of  course,  the  earning  capacity  of  the  road 
depends  on  the  rates  they  are  allowed  to  charge,  in  a  great  measure. 
The  value  of  bonds  and  stock  depends  upon  what  they  earn;  what 
they  earn  depends  mDon  the  rates;  and  so  it  goes  in  a  circle  to  some 
extent. 

Senator  Cullom.  I  do  not  want  to  hurry  3^ou,  Judge,  in  what  you 
have  to  saj^ ,  but  I  think  it  is  proper  that  the  committee  should  make 
it  known  that  we  expect  to  conclude  our  hearings  in  a  few  days,  and 
that  two  or  three  other  Commissioners  are  to  be  heard,  as  well  as  a 
good  many  other  gentlemen,  so  that  we  would  like  to  have  what 
you  have  to  say  further  condensed  as  much  as  it  can  be  done  con- 
sistently with  doing  justice  to  yourself  and  to  the  subject. 

Mr.  Clements.  I  am  trying  to  do  that,  and  I  am  very  nearly 
through,  Mr.  Chairman. 


132  KEGULATION    OF   KAIL  WAY   BATES. 

As  I  said  yesterday,  it  is  impossible  that  reply  can  be  made  to 
many  things  that  have  been  said  here.  I  will  not  undertake  to  do 
that.  I  have  done  practically  as  much  of  that  as  I  expected.-  I 
have  taken  certain  representative  samples  of  what  I  thought  was 
unjust,  unfounded,  and  unfair,  and  I  must  rest  with  that  as  a  sample 
of  what  might  be  said  about  the  others. 

A  good  deal  of  reference  has  been  made  from  time  to  time  to  a 
comparison  of  the  rates  in  this  country  with  those  in  England.  It 
has  been  said  that  our  rates  are  very  much  lower  than  they  are  in 
England.  The  conditions  arp  totally  different.  The  hauls  are  very 
much  longer  in  this  country  than  they  are  in  England.  The  Com- 
mission has  repeatedly  asserted,  and  I  think  established  by  its 
official  statistics,  that,  taken  as  a  whole,  the  American  rates  are 
reasonably  low,  particularly  upon  the  bulk  of  low-grade  raw  mate- 
rials. It  is  not  the  intention  of  the  Commission  to  claim  that  all 
rates,  in  this  country  or  generally,  are  unreasonable.  Upon  the 
other  hand,  it  is  not  conceded  that  such  a  thing  as  an  unreasonable 
rate  is  either  impossible  or  improbable. 

But  no  intelligent  comparison  has  yet  been  made  with  foreign 
rates  since,  as  a  rule,  the  comparisons  have  been  made  by  the  book, 
and  no  two  systems  of  accounts  in  various  countries  are  alike.  The 
service  is  unlike.  The  shipper  loads  and  unloads  in  most  cases  in 
this  country,  and  the  shipments  are  carload  in  such  large  proportion. 
The  cream  of  the  traffic  here  is  carried  by  postal  cars,  express  cars, 
and  private  car  lines,  which  service  abroad  is  reported  as  railway  serv- 
ice, and  where,  too,  the  rate  includes  such  terminal  charges  as  free 
cartage  for  collection  and  delivery.  The  freight  rates,  for  instance,  of 
Germany  cover  what  here  is  expected  only  of  express  companies 
with  their  high  cost. 

Senator  Newlaxds.  In  Germany  does  the  shipper  actually  have  to 
attend  to  the  delivery  of  the  goods  ? 

Mr.  CLE:\rENTS.  I  do  not  know  how  it  is  in  Germany.  My  refer- 
ence is  to  England  on  that  point. 

So  often  as  overcapitalization  is  mentioned  of  the  railways  of  this 
country,  comparison  is  made  of  the  $60,000  to  $65,000  per  mile  on 
our  roads  and  $200,000  per  mile  on  English  roads.  Acworth  shows 
they  are  worth  it.  We  have  over  200,000  miles  of  line,  mostly  single 
track;  270,000  miles  of  all  lines,  or  about  one-third  of  a  mile  extra 
track  or  siding  for  each  mile  of  route.  England  has  20,000  miles  of 
route,  but  50,000  miles  of  track,  or  2^  miles  for  each  single  track  mile. 
Their  roads  are  far  better  ballasted  and  policed;  their  buildings 
are  all  substantial  brick  or  stone,  while  most  of  ours  are  cheap  frame; 
their  terminals  are  far  more  expensive  in  proportion  to  their  shorter 
lines,  and  the  equipment  much  more  dense  and  expensive. 

To  all  this  should  be  added  the  fact  that  grade  crossings  are  almost 
unknown,  and  the  double  tracking  nearly  universal,  which  means 
more  expensive  and  numerous  viaducts  and  bridges,  usually  of  stone, 
where  a  great  proportion  of  our  own  is  trestle. 

Much  merit  is  made  of  the  fact  that  the  carriers,  by  their  conces- 
sions in  low  long  distance  tariff's,  have  built  up  the  trade  of  favored 
localities ;  have,  as  they  are  proud  to  put  it,  evened  up  the  advantages 
of  location  of  varied  industries. 

Let  me  read  a  clause  from  the  opinion  of  Judge  Taft  and  the  court 


KEGULATION    OF    KAILWAY   KATES.  133 

composed  of  Justices  Harlan,  Taft,  and  Lurton,  in  what  is  known  as 
the  Chattanooga  Case,  a  few  years  ago,  in  respect  to  this  matter  of 
comiDetition  and  the  lessening  of  it.  This  is  a  statement  of  that 
oj)inion : 

The  interstate-commerce  law,  it  is  conceded,  was  intended  to  encourage  normal 
competition.  It  forbids  pooling  for  the  very  purpose  of  allowing  competition 
to  have  effect.  But  it  is  not  in  accord  with  its  spirit  or  letter  to  recognize,  as  a 
condition  justifying  discrimination  against  one  locality,  competition  at  a  more 
distant  locality,  when  competition  at  the  nearer  pont  is  stifled  or  reduced,  not 
by  normal  restrictions,  but  by  agreement  between  those  who  otherwise  would 
be  competing  carriers.  The  difference  in  conditions  thus  produced  is  effected 
by  restraint  upon  trade  and  commerce,  which  is  not  only  violative  of  the  common 
law.  but  of  the  so-called  Federal  antitrust  act.     (99  Fed.  Rep.,  52.) 

Senator  Newlands.  That  was  reversed,  was  it  not? 

Mr.  Clements.  The  case  was  reversed,  but  I  do  not  think  that  lan- 
guage was  criticised  in  any  degree  by  the  Supreme  Court.  The  case 
was  reversed  on  the  ground,  as  in  the  circuit  courts  in  the  long  and 
short  haul  cases,  that  if  there  was  an  unjust  discrimination  it  must 
grow  out  of  the  fact  that  tiie  rates  were  unreasonable  at  the  nearer 
point — Chattanooga — or  that  there  was  nothing  to  justify  the  lower 
rate  at  the  other  point ;  and  they  held  that  there  was  competition  in 
that  case  from  the  Ohio  River.  This  was  in  reference  to  freight 
from  the  East,  southward  through  Chattanooga,  and  around  to  Nash- 
ville.    That  is  what  was  involved  in  the  complaint. 

A  great  deal  has  been  said  here  in  the  way  of  criticism  of  some 
statements  that  have  appeared  in  regard  to  the  effect  of  these  in- 
creases, but  as  the  committee  is  anxious  to  get  on,  and  I  want  to  get 
out  of  the  way  of  others  who  are  to  speak,  I  will  not  take  up  that 
matter  and  go  into  detail  about  it. 

But  I  will  call  attention  to  this  fact :  That  the  gross  receipts  from 
the  railroads  of  the  country  for  the  year  1903  exceeded  the  gross 
receipts  from  the  freight  business  in  the  year  1899  (two  years  put 
into  that  comparison)  by  $425,000,000.  That  money  came  from  some 
source.  There  was  perhajDS  15,000  miles  more  of  mileage  the  latter 
year  than  the  first.  I  want  to  be  perfectly  fair  about  it.  There  had 
also  been  a  decided  increase  of  tonnage,  and  there  had  been  a  diminu- 
tion of  rate  cutting  and  rebates,  which  added  to  the  gross  receipts 
from  all  these  sources. 

But  it  is  idle  to  deny  that  this  great  increase  of  rates  on  so  many 
hundred  leading  products  over  the  countr}'  that  move  every  day 
over  everv  road  in  the  countrv  plaved  no  part  in  that  vast  increase 
of  revenue  in  1903  over  1899  of  $425,000,000  on  freight.  It  is  idle 
to  go  into  it  and  say  that  the  increase  of  rates  was  a  mere  bagatelle 
or  not  to  be  considered.  Why  were  they  increased?  The  allegation 
everywhere  was  that  it  was  done  to  get  a  greater  revenue ;  that 
they  had  to  confront  greater  expense.  They  did  it  to  get  money. 
They  show  what  they  got.  Yet  the  argument  is  made  that  that 
played  no  part  in  it ;  that  the  effort  was  a  failure :  that  they  increased 
rates;  but  it  did  not  produce  much  money  from  that  source.  That 
is  a  mere  guess.  It  is  said  that  the  best  estimate  was  made,  but  that 
they  had  nothing  to  estimate  upon. 

It  is  said  that  in  the  year  1899,  when  freight  was  scarce,  there  would 
be  more  of  it — a  greater  proportion  of  it — carried.  It  seems  to  me  the 
reverse  would  be  the  case  in  the  natural  order  of  things;  that  where 


134  REGULATIOiSr    OF   RAILWAY   BATES. 

the  roads  -were  all  congested  and  the  centers  were  congested  the  freight 
would  move  then  by  the  direct  and  short  line,  so  as  to  relieve  conges- 
tion the  quickest,  because  they  would  save  time  to  take  the  short  route. 

So  in  the  matter  of  duplication's,  which  are  unavoidable  because 
some  roads  do  not  report  what  originates  and  what  is  brought  to  them, 
do  not  segregate  what  originates  on  their  own  lines  from  what  is 
brought  to  them  by  other  lines.  So  there  is  this  duplication  where  it 
is  hauled  from  one  group  to  another.  But  the  same  basis  was  used 
for  all  that  in  both  years. 

Beyond  that,  also,  the  percentage  of  the  increase  of  tonnage  in  the 
year  1903  over  the  year  1899  was  very  much  less  than  the  increase  in 
the  percentage  of  gross  receipts,  which  is  another  fact  showing  that 
when  they  increased  all  these  rates  on  these  leading  articles  for  the 
purpose  of  getting  more  money  they  did  not  fail  to  do  it.  These 
gentlemen  know  what  they  are  about.  They  are  practical  men,  they 
are  not  theorists. 

The  Chairmax.  A"\Tien  you  made  the,statement  or  report  that  is 
incorporated  in  Senate  Document  Xo.  257  3'ou  had  before  you  all 
the  data,  had  you? 

Mr.  Clements.  The  reports  had  not  been  handled,  and  most  of 
them  were  in ;  I  do  not  know  whether  all  were  in  or  not ;  some  come 
in  very  late.  But  the  tabulation  and  handling  of  these  papers  had 
not  been  put  in  shape  in  the  statistician's  office  so  that  the  matter 
could  be  covered  at  that  time  on  an  exact  basis. 

Senator  Dolliver.  Has  any  report  been  made  since  that  Avould 
bring  these  figures  up  to  date  ? 

Mr.  Clements.  It  has  been  stated  here,  I  think,  that,  figuring  on 
the  basis  of  the  statistician,  as  he  does  from  year  to  year,  it  would 
show  about  $104,000,000. 

Senator  Newlands.  $104,000,000  increase  for  1904  or  1903? 

]Mr.  Clements.  We  take  the  tonnage  and  divide  that  into  the 
gross  receipts,  but  the  difficulty  was  that  the  total  tonnage  included 
duplications.  The  statistician  has  a  way  of  eliminating  part  of  that, 
for  this  reason:  Although  the  roads  are  required  to  report  the  ton- 
nage that  originates  segregated  from  that  which  comes  to  them  from 
another  road  and  is  hauled  parth^  by  one  or  more  roads,  consequently 
causing  more  or  less  duplication,  yet  they  are  requested  to  report 
those  separately  so  that  they  can  be  divided  and  the  truth  accurately 
ascertained.  But  a  substantial  percentage  of  the  roads  fail  to  segre- 
gate the  tonnage  in  their  reports. 

Senator  Dolliver.  Does  not  the  law  require  them  to  do  it? 

]\Ir.  Clements.  The  twentieth  section  of  the  act  to  regulate  com- 
merce requires  them  to  make  annual  rejDorts  to  the  Commission,  and 
the  Commission  has  ordered  that  to  be  done,  and  prescribes  and 
prints  forms  which  are  sent  to  the  roads  with  specific  directions  to 
do  these  things,  but  a  substantial  percentage  of  them  never  do  that. 
They  will  report  the  tonnage  and  omit  the  revenue,  or  they  will 
report  revenue  and  omit  the  tonnage,  and  then  they  will  omit  to  segre- 
gate the  tonnage  which  comes  to  them  from  another  road  from  that 
which  originates  on  their  own  road.  So  that  the  final  handling  of 
these  reports  by  the  statistician  must  take  into  account  all  these 
matters,  eliminating  the  reports  from  the  roads  which  have  made 
imperfect  reports,  and  reach  an  average  from  what  is  left. 


KEGULATION    OF   RAILWAY   RATES.  135 

Senator  Dolliver.  Do  these  failures,  to  make  the  report  ordered 
or  required,  tend  to  vitiate  the  statistics  and  disturb  their  value? 

Mr.  Clements.  I  think  they  substantially  indicate  the  conditions 
yfter  they  are  finally  made  up,  but  of  course  you  can  see  that  it  makes 
it  utterly  impossible  to  make  an  absolutely  accurate  statement  with- 
out full  and  accurate  reports. 

Senator  Dolliver.  Would  you  suggest  any  changes  in  the  law  as  to 
the  form  in  which  these  reports  shall  be  made  so  as  to  make  them 
available  and  useful? 

Mr.  Clements.  I  think  if  the  twentieth  section  were  amended  so  thai 
a  reasonable  penalty  should  be  provided  for  failure  to  make  reports, 
that  would  be  a  spur  to  cause  the  roads  to  comply  not  only  within  a 
reasonable  time,  but  to  comj^ly  in  full.  The  Commission  has  several 
times  recommended  that.  There  is  no  penalty  now.  We  beg  for 
reports,  and  correspond  abotit  them,  and  do  all  we  can  to  get  them. 
That  is  one  reason  why  the  annual  report  does  not  appear  earlier. 

The  Chairman.  Proceed  with  your  statement,  Judge. 

Mr.  Cle^ients.  I  do  not  mean,  by  referring  to  this  matter  of  in- 
crease of  revenue,  to  say  that  that  was  all  ill-gotten  gain  by  unjust 
increase.  I  find  it  necessary,  in  order  not  to  be  misunderstood,  to 
caution  against  that.  There  is  no  pretense  that  there  was  no  justi- 
.  fication  for  some  of  these  increases,  and  it  is  idle  to  say  that  they  did 
not  result  in  increase  of  revenue  to  the  railroads. 

This  whole  matter  is  before  you  now.  I  am  through  with  what  1 
desire  to  say. 

The  Chairman.  The  members  of  the  committee  will  desire  to  ask 
you  some  questions. 

Mr.  Clebeents.  Before  that  I  would  like  to  say  that  the  gentleman 
who  preceded  me  yesterday,  ]\[r.  Gates,  of  Tennessee,  referred  to  what 
1  understood,  in  the  connection  in  which  he  used  it,  to  be  an  allega- 
tion that  the  recent  complaints  had  been  solicited  by  the  Commission. 
lie  did  not  say  "  by  the  Commission,"  but  he  had  used  the  matter  in 
such  a  connection  that  I  could  see  no  other  inference,  and  made 
reference  to  it  as  an  inijust,  unjustifiable,  and  unfounded  charge. 
The  gentleman  spoke  to  me  about  it  after  I  went  out  of  here — it  was 
the  first  time  I  had  met  him- — and  said  he  wanted  to  say  that  he  had 
no  idea  of  intimating  that  the  Commission  had  done  things  of  that 
kind,  but  "\;^  hat  he  did  mean  to  say  was  that  certain  literature  which 
had  been  sent  out  from  some  source  or  other  had  encouraged  that 
sort  of  thing.  It  was  a  mere  general  expression  of  opinion,  and  in 
justice  to  him  I  wanted  to  make  this  statement. 

The  Chair^ian.  AVould  you  suggest  any  amendment  to  the  exist- 
ing law  to  provide  that  the  private  car  lines  or  private  car  systems 
be  put  under  the  interstate-commerce  law,  subjecting  them  to  all  the 
provisions  of  law  relating  to  interstate  carriers  ? 

Mr.  Cle^ients.  I  have  thought  that  it  was  necessary  to  the  ends  of 
justice  that  the  service  in  connection  with  refrigeration  should  in  some 
way  be  amenable  to  the  same  jurisdiction  that  the  freight  rates  are, 
however  that  can  be  done.  • 

The  Chairman.  Do  you  believe,  or  do  you  know  directly  or  indi- 
rectly, that  there  are  abuses  and  discriminations  growing  out  of 
switching  and  terminal  charges  and  paying  commissions? 

ISIr.  Cleieents.  The  Commission  has  investigated  a  few  cases  of 


136  REGULATION    OF    RAILWAY   RATES. 

that  kind  Avhere  it  was  satisfied  that  a  manufacturing  establishment, 
which  had  a  short-line  SAvitch  or  short  road,  was  getting  an  undue 
and  unreasonable  amount  of  the  through  rate  which  would  be 
awarded  to  the  railroad.  It  would  be  incorporated  as  a  railroad, 
and  the  Commission  has  no  power  to  destroy  its  chaiter.  It  is  in- 
corporated and  acting  as  a  railroad  and  is  coupled  with  a  joint  tariff 
with  a  real  railroad,  and  we  thought  it  got  such  an  undue  proportion 
of  the  thi'ough  rate  as  to  amount  practically  to  a  rebate. 

The  Chairman.  Are  there  abtises  and  wrong  j^ractices  between 
railroads  and  ele^-ator  companies? 

Mr.  Clements.  It  is  so  alleged.  The  Commission  had  occasion 
to  investigate  that  matter  once  or  twice  within  the  last  few  years. 
Take  the  Union  Pacific  case,  for  instance.  It  was  true  that  they 
were  paying  a  certain  amount  for  all  grain  put  into  their  elevators 
at  Omaha.  PecAw  &  Co..  who  are  doing  business  over  that  road  and 
bringing  it  in  there,  would  get  the  same  allowance  for  their  own 
grain  which  they  put  into  their  own  elevator  that  was  allowed  the 
railroad.  The  railroad  said  it  was  to  its  interest  to  ha^'e  it  go  into 
an  elcA-ator  there,  because  that  was  the  end  of  the  line  of  the  Union 
Pacific;  that  they  did  not  want  their  cars  to  go  East;  they  wanted 
them  emptied  promptly  so  as  to  use  them  again  back  West:  and 
that  it  was  cheaper  to  them  to  pay  this  allowance  to  PeeA'y-  &  Co.  on 
their  own  grain  than  it  would  be  to  build  elevators  and  operate 
them,  and  so  they  had  made  this  contract.  The  testimony  shows, 
and  in  all  probability  it  was  true  as  a  contract  proposition  between 
the  elevator  company  and  the  railroad,  that  it  was  not  a  bad  con- 
tract for  the  railroad:  but  at  the  same  time  a  great  manv  have  said 
and  thought  that  was  an  undue  advantage  to  PecAW  &  Co..  and  that 
illustrates  it.  It  is  a  difficult  matter  for  the  Commission,  as  it 
would  be  for  any  court,  to  say  whether  three-fourths  of  a  cent  or  a 
cent  is  excessive  and  that  j^art  of  it  is  rebate.  It  may  be  a  little 
excessiA'e,  a  little  more  than  cost,  and  may  giA'e  the  man  who  owns 
the  elevator  a  cIuId  over  his  competitors  to  that  extent,  and  on  large 
transactions  it  would  amount  to  a  good  deal,  and  yet  no  court,  jury, 
or  commission  could  satisfactorily  say  and  demonstrate  that  it  was 
so  excessiA-e  as  to  amount  to  a  rebate. 

The  Chairman.  Do  you  think  that  the  abuses,  preferences,  ad- 
vances, SAvitching  charges.  eleAator  charges,  and  terminal  charges  can 
now  be  corrected  by  the  laAv  as  it  is?  If  not.  Avhat  suggestions  would 
you  make  in  the  Avay  of  amendment  so  as  to  reach  these  particular 
abuses  ? 

Mr.  Cle:ments.  The  difficulty  is  illustrated  in  this :  Take  the  icing 
business,  for  instance.  Undoubtedly  there  may  be  some  allowances 
made  for  the  service.  Icing  is  necessary  to  protect  certain  property 
in  transit,  "^^'hat  shall  it  be?  Shall  it  be  the  bare  cost  of  the  ice, 
or  shall  there  be  something  added  for  the  serAdce  and  for  the  other 
incidental  expenses?  And  if  so.  how  much?  It  becomes  a  matter  of 
proof  in  the  case.  One  jury  would  think  one  amount,  and  another 
jury  would  thing  another  amount  was  correct;  and  one  commission 
might  think  this  amount  was  correct,  and  the  court  another  amount. 
Unless  there  can  be  some  uniform  rule  to  cover  all  that  ought  to  be 
coA^ered  by  this  extraordinary  service  there  will  always  be  discrimi- 
nations as  long  as  the  rule  is  flexible.     We  have  not  altogether  agreed 


REGULATION    OF   RAILWAY   RATES.  137 

about  that.  Some  of  us  have  thought  that  this  matter  might  ulti- 
mately- be  reached,  under  the  present  Elkins  law,  as  a  discrimination, 
but  it  is  a  vexed  question,  and  it  will  be  litigated  to  the  end. 

The  CiTAiR^iAx.  Xaturally,  Congress  wants  to  have  the  law  put  in 
such  shape  as  to  correct  and  prevent  these  abuses.  Having  regard 
to  your  experienc  >  and  constant  study  of  these  matters  for  a  number 
of  years,  what  specific  amendment  would  you  recommend  to  be  made 
to  the  present  law  to  better  prevent  and  puiysh  all  these  abuses  ? 

]Mr.  C'LEME^'TS.  I  can  not  think-  of  anything  better  than  to  require 
the  carrier  over  whose  road  the  cars  run — or  the  car  lines,  if  j^ou  can 
make  them  subject  to  the  law  as  a  carrier — publish  their  rates  like  the 
railroads  publish  freight  rates. 

The  CiiAiRiMAN.  If  you  could  take  time.  Judge  Clements,  to  write 
out  and  send  to  us  some  specific  amendment  to  a  particular  section  of 
the  Elkins  law  or  the  original  law,  the  committee  would  be  glad  to 
have  that.  \Ye  should  be  glad  to  have  it  either  from  j^ou  or  from 
any  member  of  the  Commission.  Our  desire  is  to  strengthen  the  law 
so  as  to  reach  these  abuses  and  stop  them  entirely. 

Mr.  Cle:\eents.  If  you  desire,  we  will  undertake  to  frame  a  sug- 
gestion of  that  kind.  Of  course,  I  can  not  do  it  here.  It  requires 
a  good  deal  of  ingenuit}'  to  make  a  law  that  will  do  enough  and  not 
ttDO  much. 

The  Chairman.  I  draw  your  attention  to  these  specific  abuses,  and 
the  committee  Avill  be  glad  to  have  any  amendment  proposed  by  you 
or  the  Commission  to  cover  the  subject. 

Mr.  Clements.  I  have  no  doubt  all  the  members  of  the  Commission 
will  be  glad  to  take  time  to  do  that. 

The  Chairman.  In  the  direction  of  correction  of  these  abuses, 
could  a  more  uniform  system  of  bookkeeping  be  devised  and  adopted 
b\'  the  railroads  for  showing  the  business  of  the  roads?  I  mean  a 
svstem  that  would  enable  the  officers  or  anvbodv  to  examine  them  and 
detect  wrong. 

j\[r.  Clements.  I  am  not  an  expert  in  the  business  of  bookkeeping, 
but  it  has  always  seemed  to  me  that  if  every  road  should  be  required 
to  keep  the  same  kind  of  books  so  that  an  examiner  could  go  into  a 
railroad  office  and  find  every  class  of  items  on  the  same  book  in  each 
office  and  have  books  enough  to  cover  the  business,  it  would  be  a  great 
facility  afforded  if  the  papers  and  vouchers  could  be  entered,  and 
that  it  would  serve  sometimes  to  uncover  a  rebate — not  always. 

The  Chairman.  You  would  recommend  that  these  books  be  open 
at  all  times  to  inspection  by  a  Government  railroad  examiner? 

Mr.  Clements.  I  certainly  think  that  would  be  a  great  check  on 
these  evasions.  The  Commission  now  has  the  power  to  investigate 
under  the  decision  of  the  Supreme  Court — to  call  for  the  production 
of  books  and  papers — but  it  must  call  for  something  definite.  It  does 
not  know  what  to  call  for  until  it  has  found  out,  and  does  not  know 
the  number  of  the  voucher  or  what  book  to  call  for,  and  if  we  call 
for  all  the  books  wanted  to  make  a  rambling  search,  then  we  have  a 
wagonload  of  books,  and  we  would  not  know  where  to  look  for  any- 
thing. The  Commission  Avould  be  a  year  in  examining  those  books, 
and  even  then  might  not  find  what  it  wanted.  In  the  meantime  it 
would  be  unreasonable  to  have  those  books  out  of  the  custody  of  those 
in  charge  of  the  railroad  business  in  their  offices. 


138  EEGULAT10I5-   OF  KAIL  WAY   KATES. 

The  Chairman.  Do  you  agree  that  the  long  and  short  haul  clause 
of  the  original  Cullom  law,  as  interpreted  by  the  Supreme  Court, 
is  just  and  fair  to  the  shippers  and  to  the  public,  or  would  you  amend 
it;  and  if  so,  in  what  particular? 

Mr.  Clements.  It  stands  now  just  as  it  stood  before  the  law  was 
passed.  There  never  was  a  time,  so  far  as  I  know  or  have  any  belief, 
when  the  railroads  ever  wanted  to  or  did  charge  more  for  a  short 
haul  than  a  long  haul,  except  where  it  met  competition  at  the  long- 
haul  point.  Inasmuch  as  it  is  permitted  to  do  that  in  its  own  discre- 
tion in  the  first  instance,  and  on  its  own  judgment  of  the  circum- 
stances and  conditions,  it  may  take  into  account  market  competition — 
competition  of  railroads  and  competition  of  water,  any  kind  of  com- 
petition— and  they  now  do  exactly  what  they  did  before  the  law  was 
passed  in  certain  territory  in  this  country:  They  judge  of  it  and 
decide  that  there  is  competition  at  the  far  point,  and  they  meet  the 
rate  in  force  there  and  add  the  local  rate  to  it,  either  beyond  or  back. 
If  anj^thing  that  was  being  done  before  the  interstate-commerce  law 
was  passed  was  in  that  respect  wrong,  it  is  still  wrong  where  this 
practice  prevails.  But  on  that  point  I  want  to  say  that  when  the 
interstate-commerce  law  was  passed  there  was  what  almost  amounted 
to  a  revolution  in  readjustment  of  rate  charges  and  classifications.  A 
great  manj'  of  the  roads  had  their  own  classification.  There  were 
numerous  classifications  in  the  country,  but  they  are  substantially 
brought  down  to  the  three  which  now  prevail  and  that  simplifies  the 
situation  verj!-  much.  There  was  a  general  overhauling  of  rates  in 
this  territory  between  the  Ohio  Eiver  and  the  Potomac  and  the 
Lakes,  and  in  New  England,  and  out  as  far  as  Chicago,  perhaps,  or 
the  Mississippi  River.  There  is  now  but  an  occasional  case  of  that 
practice  of  charging  more  for  the  short  haul  than  for  the  long.  The 
roads  went  out  of  that  business  when  the  law  was  passed.  I  think 
they  want  to  observe  the  law.  I  do  not  think  they  want  to  introduce 
the  practice  again  where  it  has  been  abolished. 

The  Chairman.  "Would  you  advise,  if  it  can  be  effected,  that  the 
through  railway  and  ocean  rares  be  subject  to  regulation? 

Mr.  Cle:ments.  You  mean  across  the  ocean  ? 

The  Chairman.  Yes ;  say  from  Chicago  to  Liverpool.  In  the  first 
place,  do  you  think  it  can  be  done,  and  secondly,  would  j'^ou  advise  it  ? 

Mr.  Clements.  I  should  think  that  would  be  a  very  difficult  thing 
to  do. 

The  Chairman.  If  it  can  be  done  by  law,  would  3^ou  advise  that  it 
be  done? 

Mr.  Cle3ients.  I  should  hesitate  about  that.    I  do  not  know. 

The  Chairman.  As  I  understand  it,  the  through  exjDort  rate  to 
Europe  and  the  through  imjiort  rate,  we  will  say  to  Chicago,  are  often 
less  than  the  rate  from  Xew  York  to  Chicago.  Do  you  think  that  is 
fair  and  in  the  interest  of  the  public,  the  shipping  interests  of  the 
United  States  and  of  the  producers? 

Mr.  Clements.  It  undoubtedly  seems  to  me  that  there  should  not 
be  such  a  ^^•ide  discrimination  as  that.  It  has  always  seemed  to  me 
that  it  would  be  healthful  to  have  some  competition  in  this  country 
from  other  countries.  I  have  always  been  of  that  school,  but  I  ara 
not  a  radical  in  that  respect.. 

The  Chairman.  Do  you  mean  as  to  import  or  export  ? 


REGULATION    OP   RAILWAY   RATES.  139 

Mr.  Clements.  As  to  import.  I  am  speaking  of  that  particularly, 
because  that  is  a  matter  that  has  several  times  been  brought  to  our 
attention.  There  is  the  rate,  which  was  brought  to  our  attention, 
from  Belgium  to  Chicago,  being  less  than  from  Pittsburg  to  Chicago. 
That  has  never  seemed  to  me  to  be  a  reasonable  adjustment.  There 
was  the  Import  Rate  Case,  where  freight  was  brought  from  some 
point  in  Europe  through  New  Orleans  for  San  Francisco,  where 
the  rate  was  three  times  as  much,  as  I  remember  it,  from  New 
Orleans  to  San  Francisco  as  the  rate  from  Liverpool  to  San  Francisco 
through  New  Orleans.  The  Commission  decided  that  that  was  a 
violation  of  law,  an  undue  discrimination;  but  on  this  ground  of 
competition  the  Supreme  Court  said  that  the  railroad  leading  from 
New  Orleans  to  San  Francisco  had  a  right  to  make  it,  so  as  not  to 
go  out  of  that  business ;  that  it  had  to  meet  water  competition  at  San 
Francisco. 

The  Chairman.  Does  it  not  have  the  practical  effect  of  distributing 
business,  decentralizing  business? 

Mr.  Clements.  To  do  that  ? 

The  Chairman.  Yes. 

Mr.  Clements.  T  think  it  promotes  competition. 

The  Chairman.  That  is  what  I  mean. 

Mr.  Clements.  Sometimes  it  results  in  unjust  discrimination. 

The  Chair]man.  Does  it  not  help  interior  towns  as  against  great 
ports  and  cities  ? 

Mr.  Clements.  I  have  no  doubt  it  does,  but  it  is  believed  by  the 
local  manufacturers  that  it  hurts  them. 

The  Chairman.  In  what  case  ? 

Mr.  Clements.  At  Pittsburg. 

Senator  Dollr'er.  Does  that  alwavs  depend  upon  water  compe- 
tition? 

Mr.  Clements.  Not  altogether;  no.  sir. 

Senator  Dolliver.  I  notice  it  is  said  by  the  pottery  people  at  East 
Liverpool,  Ohio,  that  pottery  is  sent  to  New  Orleans  through  Denver 
at  a  through  rate  from  Liverpool,  for  less  than  the  rate  from  East 
Liverpool  to  Denver. 

Mr.  Clements.  There  are  many  such  cases. 

Senator  DolI;Wer.  That  would  seem  to  require  some  other  explana- 
tion than  water  competition. 

Mr.  Clements.  It  is  railroad  competition  in  a  large  measure,  just 
as  was  demonstrated  in  this  Glass  Case  that  we  had.  A  railroad 
from  the  Gulf  did  some  business  in  Chicago,  and  the  railroads  from 
the  Atlantic  Seaboard  wanted  it,  and  they  undertook  to  take  a  hand. 
This  was  rail  competition  to  the  interior.  Of  course  the  Canadian 
route  was  in  that  case,  but  it  was  mostly  water  competition. 

The  Chairman.  How  long  has  the  Commission  been  giving  atten- 
tion to  this  abuse  of  division  of  freight  money  between  terminal  com- 
panies and  the  railroads? 

Mr.  Clements.  It  commenced  that  in  the  Brimson  Case. 

The  Chairman.  In  1892  ? 

Mr.  Clements.  In  1892  or  1893,  but  it  had  investigated  matters  of 
that  sort  before. 

The  Chairman.  The  Supreme  Court  held  that  Brimson  must  tes- 
tify, and  that  gave  you  a  pretty  frfee  hand. 

Mr.  Clements.  Yes,  sir. 


140  REGULATION    OF   EAILWAY   RATES. 

The  Chairman.  Did  3'ou  follow  that  up  ? 

Mr.  Clements.  No  ;  that  case  got  so  old  before  it  was  decided  and 
conditions  had  so  changed  that  we  did  not  go  further  with  that.  We 
conducted  a  great  many  other  investigations  successfully  under  that 
ruling. 

The  Chairman.  With  a  view  of  getting  this  before  Congress 
fairly,  have  you  any  case  that  you  have  prosecuted  to  final  judgment 
to  correct  the  evils  growing  out  of  the  division  of  rates? 

Mr.  Clements.  The  Commission  has  reported  upon  matters  of  that 
sort  at  Chicago  and  at  St.  Louis,  has  made  recommendations  about 
it,  and  has  sent  the  testimony  to  the  Department  of  .Justice  in  respect 
to  one  of  these  matters. 

Senator  Kean.  That  was  only  lately  ? 

Mr.  Clements.  Within  a  few  months. 

■Senator  Kean.  Since  Congress  adjourned? 

Mr.  Clements.  Oh,  no. 

The  Chairman.  You  have  that  now  under  consideration  ? 

Mr.  Clements.  Yes,  sir;  I  do  not  know  exactly  the  status  of  it, 
but  we  have  done  what  we  could  about  it. 

The  Chairman.  I  believe  you  are  investigating  the  refrigerator 
car  abuses  now  in  Chicago  ? 

Mr.  Clements.  Yes,  sir. 

The  Chairman.  Then  I  do  not  want  to  inquire  about  that.  But 
before  this  have  you  ever  directed  your  attention  to  these  abuses, 
and  have  you  taken  action  ? 

Mr.  Cleiments.  The  Commission  has  several  times  reported  the 
condition  of  things  in  regard  to  the  car  lines. 

The  Chairman.  To  the  Attorney-General? 

Mr.  Clements.  No,  sir ;  to  Congress,  and  referred  the  matter — the 
question  as  to  whether  or  not  they  were  subject  to  the  interstate  law 
in  their  charges. 

The  Chairman.  Has  anybody  refused  to  testify  in  those  cases? 

Mr.  Clements.  I  think  one  of  the  employees  of  the  Armour  Car 
Lines  or  Armour  &  Co.,  I  forget  which  it  was,  declined  to  answer 
last  fall;  but  we  were  doubtful  as  to  whether  they  ought  to  be  re- 
quired to  answer  in  that  case. 

The  Chairman.  Was  that  doubt  only  about  the  law  ? 

Mr.  Clements.  No;  we  were  doubtful  as  to  whether  the  question 
was  proper  or  pertinent. 

The  Chairman.  On  the  ground  that  the  law  was  not  sufficient  ? 

Mr.  Clements.  No,  sir. 

The  Chairman.  ^YhRt  the  committee  wants  is  to  make  the  law 
effective  to  reach  these  abuses. 

Mr.  Clements.  I  do  not  think  anything  more  can  be  done.  The 
Supreme  Court  has  decided  in  the  broadest  way  that  the  Commission 
has  the  right  to  compel  testimony  upon  this  question.  I  do  not  know 
how  that  can  be  accomplished  so  long  as  the  Commission  can  not 
punish.  The  Commission  is  not  a  court,  and  of  course  when  a  wit- 
ness declines  to  answer,  we  have  to  stop  proceeding  and  wait  until 
we  can  get  a  decision  from  the  court,  and  then  if  the  case  goes  to  the 
Supreme  Court  we  have  to  wait  until  it  decides.  I  do  not  know  any- 
thing that  Congress  could  do  to  cure  that,  so  long  as  these  matters 
are  conducted  before  a  commission-  that  can  not  exercise  any  judicial 
authority  over  the  witnesses  and  punish  for  contempt. 


EEGULATION    OF   RAILWAY   RATES.  141 

Senator  Cullom.  In  your  last  report  you  discussed  all  these  matters 
you  have  been  referring  to. 

Mr.  Clements.  I  think  so. 

Senator  Cullom.  Well,  I  have  not  read  it  very  perfectly,  but  my 
impression  is  that  you  made  recommendations  in  the  report  for  such 
legislation  as  you  think  ought  to  be  enacted  to  strengthen  your  hands 
and  strengthen  the  law.     Is  that  so,  or  not  ? 

Mr.  Clements.  That  is  so ;  yes,  sir. 

Senator  Cullom.  Do  you  discuss  in  this  report  the  question  of  the 
importance  of  giving  you  the  additional  power  that  has  been  dis- 
cussed so  much  here  as  to  rate  making,  so  called? 

Mr.  Clements.  That  matter  was  discussed  more  fully  in  the  report 
from  which  I  read  yesterday,  in  1897,  than  at  any  other  time.  That 
was  the  first  report  made  after  the  decision  of  the  Supreme  Court  in 
the  Maximum  Eate  Case,  and  the  matter  was  gone  into  very  care- 
fully and  fully  and  it  has  been  referred  to  repeatedJy  and  annually 
ever  since,  but  probably  not  so  fully  as  then. 

Senator  Cullo:m.  Have  you  made  any  recommendation  in  this  last 
report  or  any  other  recently  on  the  question  of  these  private  cars  ? 

Mr.  Clements.  Yes ;  the  last  annual  report  submits  that  matter. 

Senator  Cullom.  Do  you  recommend  specifically  what  law  should 
be  made,  if  anj^? 

Mr.  Clements.  I  do  not  think  we  undertake  to  frame  the  amend- 
ment, but  we  do  recommend  that  the  carrier  or  the  car  line,  or  what- 
ever is  the  suitable  thing  to  do,  be  made  subject  to  the  law,  and  be  put 
under  the  same  rule.  We  do  not  say  in  that  report  that  that  is  not 
the  law  now,  because  there  is  a  dispute  about  that;  but  there  is  such  a 
contest  over  it  that  we  think  the  wisest  thing  to  do  is  to  remove  it 
from  the  field  of  debate. 

Senator  Cullom.  Did  you  ever  undertake  to  make  a  case  against 
them  in  any  way  so  as  to  test  the  law  as  to  whether  you  had  jurisdic- 
tion over  them  or  not? 

Mr.  Clements.  Well,  it  is  not  improper  for  me  to  say  in  this  con- 
nection that  v.e  took  this  matter  up  with  the  Department  of  Justice, 
and  certain  other  information  which  was  asked  for  and  desired,^  and 
the  matter  has  been  taken  up  subsequently  and  is  still  under  inves- 
tigation, with  a  view  to  getting  a  fuller  development  of  the  facts, 
with  a  view  of  testing  the  question,  putting  it  into  court  where  the 
question  can  be  raised  and  a  judicial  determination  had  upon  it; 
but  still  we  have  thought  that  the  end  of  the  controversy  would  be 
reached  a  great  deal  more  quickly  if  it  was  determined  by  an  amend- 
ment. 

Senator  Cullom.  Now,  I  think  the  impression  prevails  that  the 
question  of  whether  you  should  be  given  power  to  make  rates,  and 
when  T  say  that  I  do  not  mean  that  you  should  be  given  power  to 
make  rates  for  the  whole  country  at  one  time;  but  on  a  question 
where  there  is  a  dispute  or  a  claim  on  the  part  of  anj^one  that  he  has 
been  charged  an  exorbitant  rate,  whether,  if  you  determine  that  ques- 
tion, you  should  have  the  right  to  determine  what  a  reasonable  rate 
would  be.  That  is  one  of  the  questions  before  the  country  about 
which  the  public  is  very  much  concerned.  Another  is  the  question 
as  to  terminal  charges,  and  another  is  the  question  of  these  private 
cars.     Now,  those  three  things,  to  my  mind,  are  engaging  the  atten- 


142  REGULATION    OP    RAILWAY   RATES. 

tion  of  the  country  very  materially,  and  we  are  called  upon  to  de- 
termine whether  any  legislation  additional  is  necessary,  and  if  so, 
what  kind  ?  Now,  has  your  Commission,  or  the  Commission  of  which 
you  are  a  member,  in  any  of  these  reports  lately  set  out  any  recom- 
mendation on  those  three  different  things  ? 

Mr.  Clements.  In  our  last  annual  report  all  those  matters  are  re- 
ferred to  specifically. 

Senator  Cullom.  Do  you  in  your  reports  recommend  some  specific 
legislation? 

Mr,  Clements.  I  would  not  say  that  we  undertake  to  specify  the 
language  that  would  carry  out  the  end,  but  we  specifically  recommend 
that  there  be  an  amendment  in  respect  to  these  matters  so  as  to 
remove  all  doubt  there  may  be. 

Senator  Cullom,  What  have  you  recommended  under  those  three 
different  propositions  ? 

Mr,  Clements.  In  connection  with  the  power  to  correct  an  unjust 
rate,  by  substituting  a  just  one  therefor,  it  was  recommended  in  order 
to  make  that  effective  that  there  ought  to  be  some  power  to  put  into 
effect,  to  fix  divisions  between  companies  and  connecting  lines,  mak- 
ing a  through  rate;  otherwise  it  would  be  largely  defeated  in  some 
cases. 

Senator  Cullom.  And  you  recommend  new  legislation  to  be  had. 

Mr.  Clements.  Yes. 

Senator  Cullom.  Is  there  any  other  question  ? 

Mr.  Clements.  I  do  not  think  in  the  last  report  we  referred  to 
this  matter  of  some  penalty  for  failure  to  make  reports,  and  to  make 
them  as  required,  but  we  haA^e  recommended  that  at  times  heretofore, 
and  I  am  quite  sure  the  railroads  have  never  had  any  serious  objec- 
tion to  that  kind  of  a  spur.  Those  which  do  make  their  reports  fully 
and  promptly  certainly  would  have  no  objections  to  the  other.  This 
to  the  end  that  these  statistics  may  be  made  up  promptly  and  more 
accurately. 

Senator  Cullom.  And  the  public  is  desirous  that  whatever  law  we 
enact  not  only  be  enforcible,  but  be  enforced. 

Mr.  Clements.  Yes, 

Senator  Cullom,  And  we  would  like  to  know  as  a  committee  as 
near  as  possible  what  the  Commission  vrho  are  dealing  with  the 
matter  all  the  time  really  think  as  to  what  should  be  done  from  the 
different  points  of  view  where  you  consider  them.  So,  if  there  is 
any  other  suggestion  you  have  to  make  as  to  an  amendment  to  the 
law  or  a  change  of  the  law,  we  would  like  to  know  exactly  what  it  is. 

Mr.  Clements.  Well,  it  has  been  said  frequently  that  the  water 
lines  ought  to  be  placed  within  the  Interstate  Commerce  Commis- 
sion's power.  I  refer  now  to  the  coast  water  lines.  The  railroads 
think  that  is  a  fair  thing,  that  if  they  are  under  the  law  these  lines 
ought  also  to  be  under  the  law.  I  see  no  objection  to  that.  I  do  not 
know  that  it  is  urged  from  the  public  standpoint,  but  it  would  seem 
to  be  a  just  thing. 

Senator  Newlands.  Is  that  urged  as  to  tlie  river  lines  also? 

Mr.  Clements.  Well,  I  do  not  know  about  that.  That  has  not 
been  a  matter  which  has  been  considered.  The  railroads  have  partly 
taken  care  of  that  themselves.  They  have  run  the  boats  out  of  the 
rivers,  and,  to  use  Mr.  Lincoln's  expression,  who  was  on  the  stand 


REGULATION    OF    RAILWAY   RATES.  143 

the  other  day,  they  have  met  the  water  rates  in  the  interior,  so  that 
the  boats  do  not  do  A^ery  much. 

Senator  Newlands.  You  gentlemen  are  attempting  to  administer 
this  law  as  it  stands,  and  you  find  difficulty  in  doing  it,  and  we  are 
now  .trying  to  find  out  what  improvements  of  the  act  are  necessary 
to  be  made  in  order  to  enable  you  to  enforce  the  law. 

Mr.  Clemen; TS.  I  think  you  haA-e  covered  about  those  Avhich  the 
Commission  has  thought  are  necessary  to  give  effect  to  its  purposes. 
I  ought  to  say  on  this  matter  about  private  car  abuse  and  terminal 
abuse,  and  particularly  the  abuse  about  the  terminal  lines,  that  that 
is  a  matter  that  hns  groAvn  up  mucli  more  intensely  and  to  an  aggra- 
vated degree,  in  my  judgment  and  observation,  than  it  has  ever  been 
before,  since  the  Elkins  Act,  since  outright  rebates  ha\^e  stopped. 
These  other  devices  ha\'e  crept  in. 

Senator  Cullom.  They  haA^e  made  up  new  styles  of  rebates? 

Mr.  Clements.  Yes. 

Senator  Newlakds.  Is  not  that  ahvays  the  case? 

Mr.  Clements.  Yes;  A\'hen  the  water  is  dammed  up  one  Avay,  they 
find  some  other  Avay,  if  they  can  do  it  hiAAfully.  if  the  desire  is  there 
and  it  is  practical.  That  is  human  nature ;  but  the  Elkins  Act  is  an 
act  against  all  forbidden  discriminations. 

.   Senator  Neavlands.  You  do  not  pretend  to  say  that  the  passage  of 
the  Elkins  Act  Avas  a  bad  thing  to  clo  ? 

Mr.  Clements.  Not  at  all.  We  haA^e  said  that  it  has  had  a  tre- 
mendous effect  in  the  diminution  of  these  abuses.  Hoav  long  that 
Avill  last  is  a  matter  to  be  determined.  When  the  Cullom  bill  was 
passed,  for  tAvelve  or  fifteen  months  there  AA'as  but  little  abuse  of 
these  matters.  It  grew  up  gradually  afterwards,  and  almost  every 
1st  of  January,  from  that  time  doAvn  to  this,  these  railroad  gentle- 
men get  together  and  make  a  gentleman's  agreement  that  they  will 
quit  and  reform  and  turn  a  ucaa-  leaf  and  not  do  it  any  more.  They 
break  doAAm  again  and  make  a  resolution  again.  They  are  noAV  under 
a  good  resolution,  and  I  have  not  a  doubt  in  the  Avorld  that  the  prac- 
tice has  been  greatly  diminished  since  the  Elkins  Act  Avas  passed 
and  since  these  injunctions  Avere  obtained. 

And  so  much  has  been  said  here  time  and  again  to  the  effect  that 
the  Commission  had  not  invoked  the  Elkins  Act  or  undertaken  to 
exercise  its  duties  and  poAvers  under  that,  that  I  Avould  say  it  is 
wholly  unfair,  because  Avhen  this  exposure  of  wholesale  rebates  was 
made  in  January,  1902,  the  Commission  promptly  passed  the  matter 
over  to  the  Deportment  of  Justice  and  asked  to  have  proceedings 
instituted  to  enjoin  and  stop  it,  and  any  other  proceeding  that  could 
be  instituted  under  the  laAv.  That  Avas  done  in  14  cases  against 
14  of  the  leading  railroads  in  the  West  and  in  the  trunk  lines.  The 
injunctions  AA'ere  granted  temporarily,  and  before  the  matter  Avas 
passed  upon,  Avhile  it  Avas  before  the  court,  the  Elkins  bill  was  passed, 
•and,  as  I  understand  it,  those  injunctions  hold  good  now,  but  they 
hold  by  virtue  of  the  Elkins  law,  which  came  in  afterAvards.  So  it 
is  not  fair  to  say  that  because  aa'c  anticipated  that  when  it  was  a 
doubtful  remedy,  as  Mr.  Peck  said,  it  was  the  most  available  thing, 
and  it  was  another  additional  opportunity  the  Commission  was  af- 
forded to  reach  these  matters.  I  hold  that  exposure  had  a  good  deal 
to  do  with  the  passage  of  the  Elkins  bill,  if  I  may  be  permitted  to 
say  so.     It  exposed  a  condition  of  things  which  suggested  the  act. 


144  EEGULATIO]S^    OF   RAILWAY   RATES. 

Senator  Newlands.  The  first  proceeding  for  injunction  was  under 
the  original  act? 

Mr.  Clements.  Yes. 

Senator  Neavlands.  And  the  Elkins  law  was  passed  before  the 
matter  was  determined? 

Mr.  Clements.  Yes.  Then  there  was  another  suit  begun  directly 
under  the  Elkins  Act  against  the  Chesapeake  and  Ohio  Eailroad. 
That  makes  15  cases. 

Senator  Dolliver.  What  was  the  subject-matter  of  the  suit? 

Mr.  Clements.  It  was  coal  rates  from  Virginia  points  into  !N^ew 
England,  where  the  Chesapeake  and  Ohio  undertook  to  deliver  coal 
to  the  New  York,  New  Haven  and  Hartford  road,  I  believe,  in  New 
England  at  a  price  which  was  less  than  the  freight  rates  from  the 
mine  to  the  seaboard  and  the  rate  from  there  to  New  England. 

Senator  Dollivek.  What  form  did  that  take? 

Mr.  Clements.  It  was  a  contract  between  the  Chesapeake  and 
Ohio  Railroad  to  deliver  a  certain  number  of  tons — up  in  the  mil- 
lions— within  a  certain  period,  and  they  did  deliver  a  part  of  it,  and 
were  proceeding  to  deliver  the  balance,  while  their  published  rate 
and  the  rate  beyond  to  New  England  points  made  it  impossible  for 
them  to  do  it  on  the  terms  of  the  contract,  and  the  competing  miners 
complained  of  it. 

Senator  Dolliver.  Have  you  sought  to  enjoin  a  discrimination  be- 
tween two  localities? 

Mr.  Clements.  I  do  not  think  that  ever  has  been  made  where  the 
discrimination  was  on  the  published  rate,  except  in  the  case  referred 
to  the  other  day,  that  case  of  some  years  ago,  involving  Wichita  and 
Missouri  River  points;  and  referring  to  that  Elkins  Act,  you  will 
find  that  the  words  are  "  where  the  Commission  has  reason  to  be- 
lieve "  that  there  is  a  violation  of  the  law  it  may  ask  for  an  injunc- 
tion. I  mean  discrimination  that  is  forbidden  by  law.  Now,  it  has 
been  said  here  that  the  Commission  need  not  wait  for  an  investiga- 
tion and  play  like  a  court  and  investigate  and  find  out  the  facts,  but 
just  walk  right  into  court  and  begin  a  case,  that  that  would  be 
sufficient,  if  it  was  permitted  to  do  that  in  regard  to  the  correction  of 
an  unreasonable  rate.  Now,  the  Commission  acting  in  good  faith 
must  have  the  belief  before  they  can  go  into  court  and  accuse  a  road 
with  violating  the  law.  There  must  be  some  reason  for  that  belief. 
Now,  must  it  inaugTirate  the  practice  of  taking  up  every  complaint 
thrown  at  it  from  every  source  and  saying  that  a  complaint  is  here 
and  we  will  institute  a  suit?  I  do  not  think  that  would  please  the 
Louisville  and  Nashville  road  or  any  other  road.  I  do  not  think  it 
would  be  fair  or  just  to  the  Commission,  and  if  it  is  going  to  inform 
itself  so  that  it  may  have  a  belief  based  on  reason,  how  can  it  do  that 
better  than  hj  ascertaining  the  facts  in  the  presence  of  both  parties? 
Shall  it  go  and  see  one  of  the  parties  in  a  fence  corner  and  get  one 
side  of  it  and  form  a  belief  on  that  and  institute  proceedings  against 
a  road  ?     I  do  not  think  so. 

Senator  Dolliver.  Are  not  most  of  these  discriminations  which 
are  published  in  the  rates  obvious  ? 

Mr.  Clements.  They  are  obvious  as  discriminations,  but  whether 
they  are  reasonable  or  unreasonable,  due  or  undue,  is  not  so  obvious 
as  the  discrimination.     The  third  section  condemns  undue  and  un- 


REGULATION    OF    RAILWAY    RATES.  145 

reasonable  discriminations,  but  there  are  many  discriminations  which 
the  court  has  said,  and  which,  according  to  the  facts  and  the  law  itself , 
it  is  manifest  are  not  necessarily  illegal  because  they  are  discrimina- 
tions. They  are  due  and  reasonable  because  due  to  circumstances 
and  conditions  which  in  many  cases  justify  them,  as  the  courts  have 
held  and  as  the  Commission  has  found. 

Senator  Kean.  How  long  have  you  been  a  member  of  the  Inter- 
state Commerce  Commission? 

Mr.  Clements.  About  thirteen  years.  '  i 

Senator  Kean.  You  were  a  member  in  1889  ? 

Mr.  Clements.  No. 

Senator  Kean.  In  1899  ? 

Mr.  Clements.  Yes. 

Senator  Kean.  Did  the  Commission,  on  the  8th  day  of  December, 

1899,  enter  a  formal  order  instructing  its  secretary  to  cooperate 
assiduously  with  associations  to  secure  the  passage  of  an  act  through 
Congress  ? 

Mr.  Clements.  Well,  there  was  an  order  of  that  sort  entered  on  the 
minutes  by  the  Commissioners  that  were  present  at  that  time. 

Senator  Kean.  Will  you  kindly  give  us  a  copy  of  that? 

Mr.  Clements.  I  haven't  it  here. 
•  Senator  Kean.  Could  you  produce  it  ? 

Mr.  Cleinients.  Yes.  That  is  some  five  or  more  vears  ago.  It  was 
gone  over  here  with  Mr.  Wolcott  on  this  committee  when  he  was  a 
member  of  it  and  was  fully  discussed. 

Senator  Kean.  Did  your   secretary,  under   date  of  February  3, 

1900,  issue  a  circular  letter  in  his  official  capacity  to  associations  and 
shippers  to  write  to  Senators  and  Representatives  in  favor  of  the 
passage  of  a  bill  ? 

Mr.  Clements.  I  do  not  know  about  that.     I  can  find  out. 

Senator  Kean.  If  you  would  give  us  that  we  would  like  to  have  it. 
I  have  here  a  copy  of  a  publication  and  the  substance  of  testimony 
offered  at  hearings  held  by  the  Interstate  Commerce  Commission  of 
the  United  States,  sent  to  the  House  of  Representatives,  in  favor  of 
amending  the  interstate- commerce  act,  published  bj'  the  interstate- 
commerce  law  convention.  You  had  a  large  number  of  copies,  did 
you  not,  in  the  office  of  the  Interstate  Commerce  Commission  last 
winter  ? 

Mr.  Clements.  I  do  not  know  about  that. 

Senator  Kean.  Given  out  with  your  report? 

Mr.  Clements.  I  do  not  know  about  that.  It  may  have  been  done. 
What  year  is  that  that  you  refer  to  ? 

Senator  Kean.  Published  in  the  year  1904. 

Mr.  Clements.  I  have  no  knowledge  of  anything  of  that  kind. 

Senator  Kean.  At  the  close  of  Mr.  Prouty's  statement  the  other 
day  it  was  suggested  that  the  committee  would  like  some  information 
as  to  the  statistical  work  of  the  Commission.  Will  you  be  kind 
enough  to  tell  me  who  has  charge  of  that  work? 

Mr.  Clements.  Prof.  W.  C.  Adams,  of  Ann  Arbor,  Mich. 

Senator  Kean.  Is  he  a  professor  in  the  Michigan  University  ? 

Mr.  Clements.  Yes. 

Senator  Kean.  Of  what  ? 

74lA— 05 10 


146  EEGULATION-   OF   EAILWAY  RATES. 

Senator  Dollr'er.  He  is  the  head  of  the  school  of  political  econ- 
omy, I  think.  He  is  one  of  many  professors  of  economics,  but  I 
think  he  is  the  head  of  this  college  or  school  of  economy. 

Senator  Ivean.  How  long  has  Professor  Adams  had  charge  of  the 
statistical  work  of  the  Commission? 

Mr.  Cle^ients.  He  has  had  it  longer  than  I  have  been  on  the  Com- 
mission— I  suppose,  practically,  from  the  beginning.  Judge  Cooley 
brought  him  there.    He  selected  him,  practicall3%  as  I  understand  it. 

Senator  Kean.  Do  you  think  that  if  the  Commission  had  the  power 
to  fix  a  rate  that  would  do  awav  with  all  rebates  ? 

Mr.  Clements.  No. 

Senator  Kean.  Do  you  think  it  would  add  to  it? 

Mr.  Clements.  I  do  not  know  that  that  would  materially  affect 
the  rebate  question. 

Senator  Kean.  Do  you  think  it  would  prevent  discrimination? 

Mr.  Clements.  Well,  it  might  be  in  some  cases  that  it  would  oper- 
ate to  do  so.  The  Commission  has  called  attention  to  it  as  it  has 
thought  a  proper  thing  to  do,  mainly  for  the  correction  of  excessive 
and  unreasonable  rates.  It  is  not  contended  that  that  would  add  to 
the  remedy  against  paying  rebates. 

Senator  Kean.  1  have  no  further  questions. 

Mr.  Cle3ients.  Since  the  matter  of  the  order  made  five  years  ago, 
or  something  like  that,  has  been  brought  up,  I  would  say  that  I  have 
had  it  brought  to  my  attention  in  the  last  few  days  by  what  was 
shown  to  me  as  a  j)rinted  circular,  which  is  being  scattered  over  the 
country  broadcast,  and  a  copy  of  which  I  have  here,  and  which  shows 
that  a'  campaign  is  on  hand  to  secure  the  organization  of  railroad 
emjiloyees  to  protest  against  any  legislation  which  might  affect  this 
matter. 

Senator  Kean.  I  merely  call  your  attention  to  these  to  contradict 
your  statement  in  regard  to  what  the  Commission  had  done. 

Mr.  Clements.  How  does  that  contradict  the  work  we  have  done? 

Senator  Kean.  Your  statement  as  to  what  the  Commission  had 
done  in  regard  to  legislation.    That  is  all. 

Mr.  Clements.  I  do  not  see  how  that  contradicts  anything  that  I 
have  said. 

Senator  DoLLI^•ER.  I  was  interested,  Mr.  Clements,  in  a  statement 
you  have  just  made  that  the  main  operation  of  this  power  to  revise 
rates  would  be  in  respect  to  rates  that  are  exorbitant  or  unjurt  in 
themselves,  rather  than  as  respects  rebates  and  other  discriminptions. 
I  would  like  to  go  a  little  further  into  that.  Would  you  exprct  this 
power  to  revise  rates  to  be  confined  to  the  power  to  readjust  si  set  of 
rates  complained  of? 

Mr.  Clements.  Well,  I  do  not  see  wliere  else  it  could  be  applied 
unless  there  was  some  power  given  in  respect  to  fixing  th^.  minimum 
rate,  for  the  correction  of  a  discrimination,  because  if  the  Conmiis- 
sion  is  given  a  power  of  that  sort,  for  the  correction  of  discrimina- 
tion, and  it  orders  that  the  discrimination  cease,  that  might  be  done 
by  raising  one  rate  or  lowering  the  other. 

Senator  Dollfver.  So  that  the  mere  power  to  fix  the  maximum 
rate  would  not  enable  the  Commission  to  handle  the  question  of 
discriminations  at  all? 

Mr.  Clements.  I  do  not  think  it  would. 

Senator  Dollrer.  Would  it  be  agreeable  to  the  opinion  of  the 


REGULATION"   OF   RAILWAY  RATES.  147 

Commission  to  narrow  this  power  to  revise  rates  in  cases  where  the 
rates  are  complained  of  as  unjust  and  unreasonable  in  themselves? 

Mr.  Clements.  You  mean  to  fix  the  minimum? 

Senator  Dolliver.  I  mean  to  confine  the  power  of  supervising  the 
rates  to  cases  Avhere  a  rate  is  complained  of  as  unjust  and  unreason- 
able in  itself. 

Commissioner  Fifer.  The  exercise  of  the  power? 

Mr.  Clements.  I  have  never  thought  of  it  as  a  suitable  thing  for 
any  other  i^urpose  except  for  the  correction  of  an  excessive  rate. 

Senator  Ts'eavlands.  You  mean  an  excessive  rate  per  se  or  exces- 
sive by  comparison? 

Mr.  CLEiNfENTS.   Excessive  in  itself. 

Senator  Foster.  How  does  the  number  of  complaints,  say,  within 
the  last  two  years  compare  with  the  years  preceding? 

Mr.  Clements.  There  have  been  a  good  many  more  in  the  last  year 
or  two  than  in  the  same  length  of  time  ever  before. 

Senator  Foster.  What  is  the  nature  of  those  complaints  generally  ? 

Mr.  Clements.  They  often  complain  of  the  excessiveness  of  the 
rates,  and  they  frequently  complain  of  the  relation  of  the  rates  re- 
sulting in  the  discrimination  as  between  places.  Most  of  them  are 
in  one  class  or  the  other  of  those  two.  It  is  an  unjust  relation  result- 
ing in  an  undue  and  hurtful  discrimination,  or  that  the  rate  is  exces- 
sive. Of  course,  these  numerous  increases  in  rates  that  have  been 
made  in  the  last  three  or  four  years  have  resulted  in  a  good  many 
complaints  of  the  latter  class. 

Senator  Foster.  Since  the  Elkins  law  has  been  in  effect  the  com- 
plaints have  multiplied  instead  of  decreased?     Is  that  the  case? 

Mr.  Clements.   I  think  that  is  true. 

Senator  Neavlands.  They  Avere  caused  by  the  passage  of  the  Elkins 
law  ? 

Mr.  Cle]ments.  I  should  not  say  so,  and  I  should  not  think  so — co- 
incident Avith  it. 

Senator  Foster.  What  is  the  difficulty  that  your  Commission  ex- 
periences in  the  enforcement  of  the  laAv? 

Mr.  Cle:ments.  When  the  Commission  iuA^estigates  a  complaint  as 
it  is  required  under  the  laAV  to  do,  and  makes  its  report  and  findings 
of  fact,  and  its  conclusions,  and  finds  that  there  is  a  disobedience  of 
the  law,  in  its  judgment,  it  makes  an  order  that  the  carriers  cease  and 
desist  from  that.  That  has  no  effect  at  all  until  the  Commission  can 
go  into  court  affirmatively  and  obtain  a  judgment  or  decree  to  that 
effect. 

Mr.  Foster.  Wliat  remedy  would  you  suggest  to  correct  that  de- 
fect in  the  laAv,  or  that  want  of  poAver  in  the  Commission  ? 

Mr.  Clements.  Well,  I  have  ahvays  thought  that  when  a  rate 
was  found  to  be  unreasonable,  that  public  authority  ought  to  be 
able  to  find  what  is  the  reasonable  rate  and  order  the  carriers  to 
cease  and  desist  from  charging  any  more  than  the  reasonable  rate  in 
that  case,  and  that  that  ought  to  go  into  effect  after  a  reasonable  time 
within  which  the  carriers  may  apply  to  the  courts  if  they  desire  to 
do  so. 

Senator  Kean.  Does  that  mean  a  maximum  and  a  minimum  ? 

Mr.  Clements.  I  have  never  advocated  a  minimum  rate. 

Senator  Foster.  Have  you  finished  ? 


148  KEGULATION    OF   KAIL  WAY   RATES, 

Mr.  Clements.  That  is  all,  that  the  rate  go  into  effect,  say,  in 
thirty  days  or  forty  days  after  the  Commission  has  made  its  order. 
That  would  give  forty  days,  if  the  carrier  thought  it  was  an  unrea- 
sonable order  and  ought  not  to  be  enforced,  within  which  the  car- 
rier might  file  a  bill  against  it,  and  if  there  is  any  ground  on  which 
it  can  be  held  up,  they  can  get  an  order  to  that  effect.  There  is  not 
the  slightest  objection  in  my  judgment  to  the  question  of  what  the 
Commission  has  done,  the  propriety  of  it  and  so  on,  in  going  to  the 
court,  if  there  was  any  way  in  which  !he  court  can  act  upon  it;  but 
as  the  law  has  been  interpreted  the  courts  can  not  legislate.  The 
fixing  of  a  rate  for  the  future  is  legislation,  and  it  seems  to  me  that 
if  the  rate  for  the  future  is  to  be  fixed,  it  must  either  be  done  directly 
by  Congress  or  by  a  board  that  is  authorized  to  do  a  legislative  act 
to  that  extent,  and  I  do  not  see  how  you  can  confer  any  power  on  the 
court  to  do  anj^  more  than  to  take  jurisdiction  on  the  matter  on  the 
complaint  under  the  Constitution  of  the  United  States;  but  if  the 
rate  is  one  that  is  confiscatory,  the  courts  can  enjoin  it  and  will  do  so. 

Senator  Foster.  Now,  how  will  these  abuses  of  the  railroads  which 
are  complained  of  be  abated  or  corrected  by  conferring  this  power 
upon  the  Commission  to  revise  the  rates  of  the  railroads? 

Mr.  Cleiments.  You  ask  how  it  will  be  abated? 

Senator  Foster.  How  would  these  alleged  evils  and  wrongs  of  the 
railroad  be  corrected  by  conferring  this  rate-making  power  upon  the 
Commission. 

Mr.  Clements.  You-  mean  discrimination  ? 

Senator  Foster.  Any  of  the  abuses. 

Mr.  Clements.  If  the  Commission  is  authorized  to  investigate  a 
complaint  that  a  rate  is  unreasonable,  and  it  does  so  and  finds  the 
facts  to  that  effect,  and  is  authorized  to  name  what  is  the  fair  and 
reasonable  rate,  and  the  carrier  is  ordered  not  to  go  beyond  that  and 
is  required  to  obey  that,  that  would  be  a  correction  of  that  excessive 
rate.  It  would  not  only  condemn  the  rate  to  being  corrected,  but  it 
would  condemn  it  down  to  the  point  of  what  was  reasonable  in  the 
judgment  of  the  tribunal. 

Senator  Foster.  You  would  not  only  have  to  clothe  the  Commis- 
sion with  the  right  and  the  power  to  declare  a  rate  unreasonable,  but 
also  to  declare  what  is  a  reasonable  rate,  and  then  further  to  declare 
that  the  findings  of  the  Commission  shall  go  into  immediate  effect. 

Mr.  Clements.  That  is  what  I  think. 

.  Senator  Foster.  If  the  law  did  not  authorize  the  finding  of  the 
Commission  to  go  into  immediate  effect,  then  joii  think  there  would 
be  no  relief,  no  practical  relief,  because  the  condition  would  remain 
just  as  it  is  to-day? 

Mr.  Clements.  Yes. 

Senator  Foster.  Suppose  that  the  law  should  authorize  the  Com- 
mission to  examine  into  these  complaints  and  the  Commission  should 
find  the  complaint  well  founded  and  the  charge  excessive  and  unrea- 
sonable and  should  order  that  the  railroads  should  fix  a  reasonable 
rate  within  a  reasonable  time  or  fix  another  rate  within  a  reasonable 
time,  and  in  the  event  that  they  failed  to  fix  a  reasonable  rate  within 
that  time  that  the  Commission  would  then  be  authorized  to  go  into 
court  and  enjoin  them  from  carrying  out  their  excessive  rates. 

Mr.  Clements.  If  I  understand  you,  the  proposition  is,  if  the  Com- 


EEGULATION    OF    RAILWAY   RATES.  149 

mission  .was  authorized  only  to  condemn  the  rate  that  was  in  issue 
and  then  recommend  that  the  carriers  fix  a  reasonable  rate  after  the 
Commission  has  named  them 

Senator  Foster.  Yes. 

Mr.  Clements.  And  the  matter  was  left  that  way  for  a  period  of 
time  within  which  if  they  did  not  do  it  the  Commission  could  make 
another  order  and  say  what  is  reasonable — or,  what  is  the  next  step  ? 

Senator  Foster.  The  next  step  is  that  the  Commission  could  man- 
damus them  to  fix  a  reasonable  rate. 

Mr.  Clements.  I  do  not  see  how  they  could  go  any  further  than 
to  enjoin  them  from  charging  the  rate  which  they  had  been  charging 
and  which  it  condemned,  because  if  the  court  said  they  must  cease 
and  desist  from  charging  that,  and  in  addition  to  that  should  order 
them  to  cease  and  desist  from  charging  any  more  than  the  court 
found  to  be  a  reasonable  rate,  then  the  court  would  be  doing  exactly 
what  the  Commission  undertook  to  do  in  the  Maximum  Rate  Case, 
and  in  the  same  way  would  be  making  a  rate  for  the  future,  as  the 
court  held  that  the  Commission  was  doing  then ;  and  I  do  not  under- 
stand that  the  court  can  do  a  legislative  act  or  that  Congress  can 
confer  upon  the  court  such  authority. 

Senator  Neavlands.  In  such  a  proceeding  suppose  the  Commission 
should  have  the  power  not  only  to  condemn  the  existing  rate,  but  to 
find  what  a  reasonable  rate  was,  and  the  law  should  provide  that 
the  Commission  itself  should  proceed  against  the  corporation  to  pre- 
vent it  from  collecting  a  rate  in  excess  of  the  rate  that  was  deter- 
mined reasonable,  could  not  the  proceeding  be  so  expedited  by  the 
law  as  to  result  in  comparatively  speedy  relief? 

Mr.  Clements.  You  mean  if  the  Commission  made  no  order  as  to 
what  the  rate  is  to  be,  but  simply  condemned  the  rate  that  was  in 
existence  ? 

Senator  Xewlands.  No ;  condemned  the  rate  that  was  in  existence 
and  declared  what  the  rate  should  be,  and  then  instead  of  having 
that  go  into  effect  immediately  requiring  the  Commission  to  com- 
mence a  suit  against  the  corporation  to  enjoin  it  from  collecting  any 
rate  in  excess  of  that  amount.  That  would  accomplish  the  same 
result  as  the  other;  but  I  understand  your  claim  is  that  it  would 
result  in  delay. 

Mr.  Clements.  AVhat  would  be  the  status  of  that  order  by  the 
Commission?  Is  that  simply  a  recommendation  of  a  rate  or  is  it  a 
rate  that  the  Commission  is  authorized  to  declare  as  the  rate? 

Senator  Newlands.  It  is  the  rate  that  the  Commission  is  author- 
ized to  declare.     Then  the  question  comes  up  as  to  its  enforcement. 

Mr.  Clements.  The  difficulty  of  that  is  that  the  Commission  have 
been  required  to  make  an  investigation  and  has  found  the  rate  un- 
reasonable and  has  found  a  reasonable  rate,  and  that  is  ]orima  facie 
taken  as  correct — under  the  present  law  that  is  the  condition.  Then 
the  Commission  must  assume  the  onus  of  going  into  the  court  where 
the  matter  will  be  tried  de  novo;  and  such  proceedings  in  equity, 
as  all  know,  relating  to  matters  of  that  sort,  not  only  in  regard  to 
questions  of  this  kind,  but  also  all  other  equity  proceedings,  are 
tedious.  It  is  particularly  so  in  respect  to  these  cases.  The  carriers 
want  to  introduce  witnesses  in  different  places  and  many  witnesses 
from  different  parts  of  the  country  to  testifj^  about  rates  and  com- 


150  KEGULATION    OF   RAILWAY   RATES. 

parative  rates;  and,  in  the  very  nature  of  things,  if  this  is  to  be  a 
thorough  investigation  either  before  the  Commission  or  before  the 
court,  to  obtain  all  the  facts  that  the  parties  at  interest  think  have 
a  bearing  by  way  of  comparison,  and  one  rate  with  another,  and  the 
conditions,  and  the  changing  conditions,  etc.,  it  is  not  a  matter  that 
could  be  expedited. 

Senator  Neavlakds.  You  think  it  would  necessarily  take  a  long 
time? 

Mr.  Clements.  It  would  necessarily  take  a  long  time. 

Senator  Newlakds.  How  long  do  you  imagine? 

Mr.  Clements.  That  depends  on  the  condition  of  the  docket  in 
the  particular  court. 

Senator  Newlands.  Suppose  the  law  provided  for  expediting  the 
cases  in  the  lower  court  and  in  the  higher  court  also  ? 

Mr.  Clements.  It  would  be  a  mere  guess  that  would  be  of  hardly 
any  value.     I  would  not  undertake  to  guess  it. 

Senator  Newlands.  What  have  you  to  say  as  to  this,  that  if  the 
rate  which  you  declare  is  a  reasonable  rate  should  four  or  five  years 
later  on  be  upset  by  the  court  upon  the  initiative  of  the  railroad,  the 
railroad  would  lose  the  difference? 

Mr.  Clements.  Well,  if  it  was  thought  possible  there  can  be  some 
guard  against  that,  but  somebody  must  lose  some  amount  in  these 
matters.  You  can  not  have  exact  and  equal  justice  in  all  these 
matters.  If  the  rate  is  not  put  into  force,  and  it  is  unreasonable 
before  the  litigation  was  commenced  and  afterwards,  the  shipper 
loses,  and  these  cases  would  be  very  greatly  expedited  if  the  onus  was 
upon  the  railroads  to  show  that  the  order  which  the  Commission 
made  was  unlawful.  The  matter  would  then  be  determined  and  the 
end  of  it  reached  much  sooner  than  it  will  be  when  the  onus  is  on 
the  public  to  assume  the  burden  through  the  Commission  and  through 
the  courts. 

Mr.  Clements.  If  they  thought  it  was  a  rate  which  they  could 
not  afford  to  put  in,  they  would  apply  at  once  for  an  injunction  and 
show  the  facts,  naturally,  and  I  do  not  think  it  is  a  hardship. 

Senator  Newlands.  Now,  where  the  railroad  seeks  to  enjoin  a  rate 
upon  the  ground  that  it  is  confiscatory,  a  preliminary  injunction  is 
often  granted,  is  it  not  ? 

Mr.  Clements.  Yes 

Senator  Newlands.  Do  they  have  to  give  bonds  in  such  proceed- 
ings? 

Mr.  Clements.  I  think  they  usually  do,  but  I  am  not  sure  about 
that. .  I  think  that  is  a  matter  in  the  discretion  of  the  court. 

Senator  Newlands.  Very  well;  then  how  is  the  shipper  protected 
in  such  a  case  as  that  ?  The  case  may  last  for  t\^^o  years,  and  during 
all  that  time  the  unjust  rates  are  collected. 

Mr.  Clements.  The  trouble  about  that  is  that  it  is  impossible  to 
protect  the  people  injured  by  the  unjust  rate,  because  if  a  bond  were 
required  and  an  accounting  made  and  the  difference  between  the  just 
rate  aftd  the  unjust  rate  finally  paid  into  court  by  the  railroad,  after 
that  question  had  been  settled  the  people  who  ship  would  be  the  ones 
to  stand  in  the  place  to  receive  the  reparation — the  men  who  had 
shipped  and  who  had  the  bill  of  lading  and  can  show  their  names  as 
shippers.     They  have  bought  the  grain  or  the  cotton  or  whatever 


EEGULATIOJSI    OP    EATLWAY   KATES.  151 

it  may  be  on  the  price  of  the  going  rate  in  effect  when  the  shipment 
was  made.  They  have  sold  on  the  basis  of  that  rate.  They  have 
disposed  of  the  matter.  The  rate  has  followed  it  on  down  and  finally 
rested  upon  the  consumer,  who  buys  and  consumes  the  product.  He 
would  have  no  standing  in  court,  for  he  did  not  ship  a  bushel  of 
grain  or  a  bale  of  cotton. 

Senator  Neaatlands.  Under  these  cases  the  reparation  would  not  go 
to  the  right  men. 

Mr.  Clements.  It  would  go  to  the  men  who  had  already  protected 
themselves,  and  the  persons  really  injured  would  have  no  standing. 
That  is  the.peculiarity  of  this  business  which  singles  it  out  from  other 
matters  of  litigation,  that  there  can  be  no  adequate  protection  against 
the  wrong  of  an  unjust  rate,  except  to  make  the  rate  right.  After 
the  rate  has  gone  into  effect  it  is  impossible  to  find  those  who  were 
injured  and  to  distribute  it  among  them. 

Senator  Xewlands.  At  that  rate,  if  the  rate  fixed  by  the  Commis- 
sion is  determined  two  or  three  years  afterwards  not  to  be  reasonable, 
then  the  railroad  loses  and  you  could  suggest  no  method  by  which 
it  could  recompense  itself. 

Mr.  Clements.  I  do  not  know  anj'  method  by  which  it  could  be 
done  except  to  expedite  the  matter  and  have  it  determined  as  soon  as 
possible.  There  must  be  some  injustice  in  all  these  matters,  as  I  have 
repeatedly  said.  There  is  no  waj",  in  my  judgment,  by  which  there 
can  be  exact  justice  done  in  relation  to  these  matters.  They  are  too 
complex. 

Senator  Xewlands.  The  court  can  onlj^  take  into  consideration 
the  question  as  to  whether  or  not  the  rate  is  confiscatory.  Is  there 
any  margin  of  difference  between  a  confiscatory  rate  and  a  reasonable 
rate? 

Mr.  Cle:mexts.  It  has  always  seemed  to  me  if  the  rate  was  made 
unreasonably  low  to  the  extent  that  it  affected  the  earning  capacity 
of  the  property,  b}^  invading  a  just  and  reasonable  rate,  it  had  begun 
to  be  confiscatory  from  the  start. 

Senator  Neavlands.  Just  as  soon  as  it  falls  below  the  standard  of 
what  is  reasonable,  that  moment  it  begins  to  be  confiscatory. 

Mr.  Clements.  To  that  extent  it  begins  to  invade  the  right  of  the 
property. 

Senator  Xewlands.  Is  there  anj^  record  so  considered  ? 

Mr.  Clements.  I  do  not  know  about  that.  Courts  look  at  the 
substance  of  things,  and  I  think  that  will  be  the  final  outcome  of  it. 

Senator  Xewlands.  You  think  that  is  the  trend  of  the  decisions 
thus  far? 

Mr.  Clements.  I  think  that  is  the  reason  and  justice  of  the  matter. 

Senator  Xewlands.  Xow,  as  to  the  elasticity'  of  rates,  great  stress 
has  been  laid  upon  that  by  the  representatives  of  the  railroads,  and 
the  contention  is  that  when  the  rate  has  once  been  established  by  the 
Commission  and  approved  by  the  court,  it  can  not  be  changed  after 
that,  and  that  it  is  desirable  to  leave  a  free  hand  somewhere  in  ad- 
justing these  rates.     Hoav  about  that? 

Mr.  Cle3Ients.  I  have  no  idea  that  there  would  be  any  trouble 
about  that.  A  decree  of  that  kind  ought  never  to  be  like  a  judgment 
or  decree  of  a  court,  final  and  conclusive.  It  must  of  course  be  ad- 
ministered upon  the  idea  that  conditions  and  circumstances  may 


152  EEGULATION   OF   EAILWAY  EATES. 

change,  and.  therefore,  when  they  do  substantially  change  and  become 
different  from  what  they  were,  when  the  rate  was  made,  there  is  a 
basis  for  a  change,  a  just  and  reasonable  basis  for  a  change  in  the  rate. 

Senator  Newlands.  To  whose  iudfifment  would  you  leave  the  de- 
termination  as  to  whether  or  not  there  was  a  change  in  the  circum- 
stances and  conditions  that  would  justify  a  change  in  the  rate  that  had 
been  fixed  by  the  Commission  and  approved  by  the  court  ? 

Mr.  Clemexts.  It  might  be  safe  to  require  a  hearing  of  the  matter 
and  approval  by  the  Commission  or  by  whatever  tribunal  acted,  but 
I  have  no  idea  that,  if  it  was  left  to  the  discretion  and  judgment  of 
the  carrier,  the  carrier  -^ould  undertake  to  put  in  another  rate 
without  a  reason  for  it.  because  there  ^^oiild  be  a  basis  immediately 
for  a  proceeding,  and  it  would  be  courting  trouble  if  it  did  it. 

Senator  Newlands.  So  that  you  think  we  can  safeh"  leave  that 
matter  to  the  discretion  of  the  carrier  ? 

Mr.  Clements.  I  think  after  it  had  been  put  in  that  the  carriers 
as  a  rule  would  not  undertake  to  trifle  with  the  matter  or  to  change 
the  rate  unless  they  had  a  substantial  reason  for  it.  They  would  have 
to  justify  it  in  a  short  time  before  the  court  again,  and  it  would  be 
folh'.  unless  there  was  a  substantial,  bona  fide  reason  for  doing  it, 
and  I  think  it  is  perfecth^  safe  to  leave  it  to  the  carriers  to  judge  of 
that,  subject  to  review. 

Senator  Newlands.  Now,  as  to  the  cases  where  the  carriers  refuse 
to  accept  the  orders  of  the  Commission.  Your  procedure  then  is  to 
turn  the  matter  over  to  the  Attorney-General? 

Mr.  Clements.  Yes ;  the  law  is  that  the  Commission  shall  request 
the  United  States  district  attorney  to  institute  the  next  proceeding, 
and  he  shall  do  it  under  the  direction  of  the  Attorney-General.  For 
convenience  to  both  the  Department  of  Justice  and  to  ourselves,  and 
that  the  Attorney-General  may  be  notified  what  the  district  attorney 
has  been  asked  to  do,  these  matters  as  a  matter  of  practice  are  sent 
through  the  Department  of  Justice,  and  then  the  district  attorney  is 
directed  by  the  xVttornej^-General  from  the  beginning. 

Senator  Xewlands.  Have  you  found  that  there  has  been  any  delay 
in  the  Attorney-General's  office  regarding  the  matters  turned  over  to 
that  Department  ? 

Mr.  Clements.  I  have  not. 

Senator  Xewlands.  There  is  no  complaint  upon  that  score? 

Mr.  Clements.  No. 

Senator  Newlands.  No  complaint  that  your  applications  have  been 
pigeonholed  by  subordinates  in  that  office? 

Mr.  Clements.  None  at  all  that  I  know  of. 

Senator  Newlands.  And  as  a  rule  during  your  experience  the 
Attorney-General's  office  has  acted  expeditiously? 

Mr.  Clements.  Yes;  there  is  no  delay  and  I  have  never  heard  of 
any  delay  in  respect  to  that.  These  injunction  cases  were  instituted 
by  bills  drawn  in  the  Department  of  Justice.  They  were  instituted 
promptly  and  the  matter  was  taken  up  promptly  and  attended  to. 
There  have  been  sometimes  matters  that  have  been  sent  there  about 
which  there  was  to  be  some  further  consultation  or  inquiry,  where  the 
proceeding  has  not  been  instituted  at  once,  but  I  do  not  know  that 
that  is  being  done  except  where  there  is  a  good  reason  for  it. 

Senator  Neavlands.  In  the  Interior  Department.  I  believe,  they 


EEGULATIOlSr    OF    EAILWAY   BATES.  153 

have  an  assistant  attorney-general,  have  they  not,  who  attends  to  the 
business  of  that  Department? 

Mr.  Clements.  I  think  there  is  an  assistant  attorney-general  for 
the  Interior  Department. 

Senator  Newlands.  Would  it  not  expedite  the  business  of  the 
Interstate  Commerce  Commission  if  an  assistant  attorney-general 
were  deputized  to  act  with  you,  if  his  office  were  in  the  same  building? 

Mr.  Cle3ients.  I  am  sure  it  would.  There  are  a  great  many 
questions  of  the  drawing  of  complaints,  and  questions  of  law  and 
consultations  that  ought  to  be  referred  to  a  lawyer  specially  in  charge 
of  the  matter.  It  can  be  handled  by  one  man  much  more  easily  than 
it  can  by  a  consultation  between  five  who  have  other  things  to  do 
at  the  same  time. 

Senator  Newlands.  Then  j^ou  would  recommend  that  that  be  done  ? 

Mr.  Clejients.  I  think  it  would  be  an  improvement.  I  have  no 
doubt. 

Senator  Newlands.  Now,  as  to  rebates,  I  understand  you  to  say 
that  after  the  original  Cullom  Act  was  passed,  there  was  a  cessation 
of  rebates  for  a  year  or  more,  and  then  they  were  resumed  ? 

Mr.  Clements.    Graduall}^;  yes,  sir. 

Senator  Newlands.  And  a  cessation  upon  the  passage  of  the  recent 
•Elkins  bill. 

Mr.  Clements.  Yes.  It  is  often  attributed  to  these  injunctions. 
I  think  the  whole  thing  went  together.  It  was  the  availability  of  the 
proceedings  under  the  law  to  stop  those  things. 

Senator  Newlands.  And  you  really  rely  upon  the  Elkins  law  to 
get  those  injunctions" and  make  them  efficient? 

Mr.  Clements.   Yes. 

Senator  Newlands.  Now,  don't  you  think  that  such  a  contingency 
that  has  occurred  a  year  or  more  after  the  passage  of  the  Elkins  law 
will  likely  occur  again  and  that  these  rebates  will  blossom  out  anew. 

Mr.  Clements.  If  the  traffic  falls  off,  and  there  is  a  scramble  among 
the  railroads  for  business,  and  the  roads  are  hustling  for  it,  I  think 
there  would  be  a  tendency  in  that  direction  unless  the  matter  is  con- 
stantly watched. 

Senator  Newlands.  It  is  more  likely  to  occur  in  a  period  of  de- 
pression ? 

Mr.  Clements.   Yes.     That  has  been  the  history  of  it. 

Senator  Newlands.  The  whole  policy  of  our  law  is  to  force  these 
railroads  into  competition  and  then  punish  them  for  resorting  to  the 
usual  methods  that  are  used  in  those  cases. 

Mr.  Clements.  You  have  left  them  in  a  state  of  competition.  I 
do  not  think  they  are  altogether  in  that  condition. 

Senator  Newlands.  What  do  you  think  about  competition  in  rail- 
roading ?  Do  you  think  it  is  a  good  thing  to  have  as  much  as  we  have 
had,  or  do  you  think  that  this  consolidation  of  railroads  which  has 
been  going  on  has  tended  to  efficiency  and  perfection  of  service  ? 

Mr.  Cle:ments.  There  is  no  doubt  about  it  tending  to  imperfect 
service  in  some  ways.  It  may  operate  otherwise  in  some  parts. 
Railroads  are  not  competing  with  one  another  and  making  fast  lines 
and  good  service  and  handsome  cars  to  get  business.  That  has  been 
their  method  of  advertising  in  competing  with  one  another.  When 
that  incentive  is  r(»moved  the  service  would  hardlv  be  as  good,  I 
think. 


154  EEGULATION    OF   RAILWA?   RATES. 

Senator  Xeavlands.  How  about  equalit}^  of  service?  Do  you  think 
it  tends  to  equality  of  service  ? 

Mr.  Clements.  If  the  roads  would  observe  their  published  tar- 
iff, recognizing  that  the  demands  of  the  laws  of  the  country  are 
the  first  obligation  resting  upon  them,  and  the  revenue  for  their  com- 
panies is  the  second,  instead  of  reversing  that,  there  would  not  be 
any  trouble  about  rebates.  They  say  thej^  pay  rebates  because  others 
do,  and  therefore  the  first  thing  to  do  is  to  save  business  and  the 
next  thing  is  to  obey  the  law.     Now,  there  will  be  rebates,  of  course. 

Senator  Xeantt.ands.  Xow,  so  far  as  equality  of  service  and  equality 
of  rate  is  concerned,  where  three  railway  sj'stems,  Ave  will  say,  are 
serving  ten  States,  each  in  active  competition  with  the  other,  there  is 
less  likelihood  of  equality  of  rate  and  equalit}^  of  service,  and  pro- 
portion of  rate  in  such  a  condition  of  active  competition,  than  where 
those  three  systems  are  consolidated  into  one  road? 

Mr.  Cleme^^ts.  Undoubtedl.v. 

Senator  Newlaxds.  So  that  consolidation  tends  toAvard  equality 
of  service  ? 

Mr.  Cle.aiexts.  Steadiness  of  rate -and  equality  of  rate  and  a  higher 
grade  of  rates. 

Senator  Xea\'i,axds  It  might  tend,  in  your  judgment,  to  diminish 
the  character  of  the  service? 

Mr.  Clements.  Yes;  and  certainly  tend  to  prcA'ent  reductions  in 
rates  that  otherwise  would  be  made. 

Senator  Xeavlands.  Xow,  as  to  your  Commission,  so  far  as  rebates 
are  concerned,  a  good  deal  of  detective  work  is  required. 

]Mr.  Clements.  A  good  deal ;  jes,  sir. 

Senator  Xewlands.  So  that  we  have  united  in  one  Commission 
the  men  Avho  are  to  be  both  the  judges  and  the  detectives  in  order  to 
make  them  efficient  in  both  branches. 

Mr.  Clejients.  Well,  the  members  of  the  Commission  do  not  them- 
selves go  out  as  detectiA^es  simph'  to  find  out  about  these  things.  "We 
employ  agents  to  do  that  to  a  limited  extent,  and  Avhen  we  get  Avhat 
seems  "to  be  evidence  of  the  violation  of  the  law,  we  utilize  that  by 
making  a  public  inquiry  or  by  pursuing  through  the  detectiA'e  an 
extended  quiet  inquiry,  and  utilize  it  in  Avhatever  waj'  seems  to  be 
the  wisest  to  ascertain  the  facts  and  correct  the  wrong. 

Senator  Xeavlands.  Do  you  think  it  would  be  Avise  to  segregate 
those  detectiA'e  duties  from  the  present  members  of  the  Commission? 

Mr.  Clements.  I  have  neA'er  thought  there  was  A^ery  much  in  the 
protest  that  the  Commission  was  the  detective,  prosecutor,  jury, 
judge,  and  executioner.  I  liaA^e  heard  all  that  said.  The  Commis- 
sion has  no  personal  interest  in  these  rates,  no  member  of  it  has,  and 
it  seems  to  me  as  if  it  is  an  objection  to  form  rather  than  to  substance. 
Of  course,  if  the  work  of  detection  and  iuA^estigation  in  the  hearing 
of  complaints  is  to  become  so  that  it  requires  more  work  than  the 
Commission  can  do,  there  might  be  a  reason  for  adding  to  it  for  that 
purpose,  but  I  haA-e  never  thought  there  Avas  much  substance  to  the 
objection  that  these  things  Avere  concentrated  in  the  same  persons  for 
the  reason  that  they  haA-e  no  interest  whatever  except  to  enforce  the 
law  as  between  the  parties  in  the  interests  of  the  public. 

Senator  Xeaa-lands.  Do  you  think  that  a  man  who  is  trained  to  dis- 
charge quasi  judicial  duties,  the  highest  duties  that  belong  to  this 


REGULATION    OF    RAILWAY   RATES.  155 

Commission,  has  that  class  of  mind  which  enables  him  to  prosecute 
successfully  detective  work? 

Mr.  Clements.  No.  If  you  want  to  make  a  ferret  of  him,  I  do  not 
think  he  is  suitable  for  both  places. 

Senator  Newlands.  Now,  as  to  the  through  rates,  you  would  be 
called  upon  to  make  a  division  of  the  rate,  would  you  riot? 

Mr.  Clements.  In  some  cases  we  have  thought  that  the  effect  could 
not  be  given  to  the  correction  of  a  wrong  rate  and  the  substitution  of 
a  just  one  without  that  power. 

Senator  Newlands.  And  you  would  expect  that  power  to  be  given  ? 

Mr.  Clements.  I  think  that  is  incident  to  the  other. 

Senator  Newlands.  Wliat  do  you  think  of  a  special  court? 

Mr.  Clements.  Well,  I  have  thought  that  a  special  court  would 
probably  be  more  expeditious  than  the  miscellaneous  courts  all  oyer 
the  country;  and  if  a  court  has  this  class  of  business  to  deal  with 
and  no  other,  that  there  would  be  this  much  about  it:  The  matters 
would  be  expedited,  and  there  are  a  great  many  things  about  this  mat- 
ter of  rate  making  and  about  the  testimony  produced  by  witnesses  in 
respect  to  it,  traffic  men  and  others,  which  at  first  is  much  more 
bewildering  to  a  man  who  has  only  heard  one  case  or  hears  one  only 
now  and  then,  than  it  is  to  a  person  who  is  dealing  with  it  all  the 
time,  who  has  been  told  repeatedly  that  it  is  full  of  peculiarities  and 
changing  conditions,  and  that  practical  experience  and  association 
with  it  is  necessary  to  have  any  judgment  about  it  at  all.  I  think  it 
would  greatly  aid  a  court  in  the  course  of  a  few  months  or  years  if 
it  became  familiar  with  all  these  questions  and  familiar  with  the 
witnesses  who  testify  about  these  matters  and  the  methods  by  which 
they  consider  these  questions  in  constructing  their  tariff',  etc.  I  see 
no  objection  to  a  special  court  because  it  is  dealing  with  a  special 
matter,  if  it  is  constitutional  to  make  such  a  court. 

Senator  Neavlands.  Would  you  have  such  a  court  sit  in  Washing- 
ton? 

Mr.  Clements.  Washington  and  other  places. 

Senator  Newlands.  A^^ierever  convenience  would  require? 

Mr.  Clements.  Yes;  whatever  would  be  the  wisest. 

Senator  Newlands.  As  to  the  constitution  of  the  Interstate  Com- 
merce Commission,  the  number  of  its  members,  etc.,  do  you  think 
it  would  be  advisable  to  have  this  Commission  divided  into  branches, 
so  that  there  could  be  one  or  more  members  of  the  Commission  at 
each  one  of  the  rate-making  centers  of  the  country. 

Mr.  Clements.  I  have  never  thought  there  was  any  great  advan- 
tao-e  about  that.  I  think  that  it  has  become  understood  that  all  mem- 
bers of  the  Commission,  or  even  a  majority  of  the  members  of  the 
Commission,  would  not  undertake  to  hear  every  case  that  arises. 
One  must  act  in  many  cases  and  take  the  testimony,  or  two,  as  the  case 
may  be,  in  order  to  prevent  delay  about  these  matters. 

Senator  Newlands.  Now,  it  is  contended  that  as  it  is,  that  under 
existing  conditions,  the  rate-making  is  the  result  of  the  united  judg- 
ment of  a  great  many  minds — the  local  agent  at  the  local  station,  the 
freight  agent,  and,  finally,  the  traffic  manager,  and  that  the  rate- 
making  is  finally  adjusted  in  five  or  six  great  centers  in  the  country, 
and  that  it  is  essential  that  these  men  should  be  in  touch  with  com- 
mercial conditions  and  should  feel  the  commercial  pulse.    If  that  is 


156  REGULATION    OF    RAILWAY    RATES. 

SO,  would  not  that  consideration  also  attach  to  the  Commission — that 
is,  to  have  the  power  of  revising  and  correcting  these  rates? 

Mr.  Clements.  A  general  observation  of  that  sort  might  afford 
some  help,  but  if  there  is  to  be  any  power  of  that  sort,  the  Commis- 
sion has  got  to  deal  with  it  by  the  intelligent  and  thorough  j^resenta- 
tion  of  the  matter  by  the  parties  interested. 

Senator  Newlands.  Do  you  think  it  would  be  an  advantage  to 
provide  that  a  certain  proportion  of  the  Commission  should  consist 
of  men  who  have  been  trained  in  experience  in  rate  making  as  traffic 
managers  or  otherwise? 

]\Ir.  Cleinients.  Well,  I  do  not  think  it  would  be  amiss  to  have  some 
of  that  sort.  A  good  many  of  the  State  commissions  have  provisions 
of  that  sort.  I  know  in  my  own  State  one  of  the  commissioners  must 
be  a  lawyer,  another  a  business  or  commercial  man,  and  another  a 
railroad  man. 

Senator  Newlands.  And  as  a  result  of  your  experience,  do  you 
think  we  will  ever  have  equality  of  rate  and  of  service  as  between  in- 
dividuals and  communities  and  proportionate  rates  as  to  commodities, 
until  we  have  Government  ownership? 

Mr.  Clements.  I  do  not  think  you  ever  will  have  exact  justice. 
I  do  not  think  anvbodv  can  construct  the  scales  that  will  indicate  what 
exact  justice  is. 

Senator  Cullom.  Do  you  think  that  exact  justice  would  be  brought 
about  b}'  the  Government  owning  the  railroads? 

Mr.  Clements.  I  do  not  see  how  that  could  be  done  either. 

Senator  Newlands.  I  am  not  asking  you  about  exact  justice.  Do 
you  think  we  could  more  nearly  approximate  equality  of  service  and 
equality  of  rates  as  between  individuals  and  communities,  and  pro- 
portionate rates  as  to  commodities  under  Government  ownership  than 
under  private  ownership? 

Mr.  Clements.  The  temptation  to  give  rebates,  of  course,  would 
be  entirely  eliminated,  but  somebody  would  have  to  judge  as  to  what 
was  a  reasonable  discrimination  between  places  and  commodities,  in 
order  to  make  a  scale  of  rates,  for  the  Government  as  well  as  for  the 
carriers,  and  the  judgment  of  the  man  might  be  defective.  I  have 
never  thought  that  Government  ownership  was  a  wise  proposition. 
It  was  on  that  question  that  I  retired  from  the  other  wing  of  the 
Capitol  some  years  ago,  when  the  Farmers'  Alliance  required  a  man 
to  say  that  he  was  for  Government  ownership  and  for  the  sub- 
treasury,  which  I  could  not  say;  but  there  are  many  difficulties 
about  that.  'Wliat  Government  Department  would  determine  what 
improvements  were  to  be  adopted  in  the  way  of  new  devices  for  the 
saving  of  life  and  for  the  enlargement  of  the  business  and  for  those 
many  things  which  the  interest  of  the  corporations  cause  them  to 
adopt  after  investigation,  and  with  a  view  of  increasing  their  revenue, 
and  then,  also,  think  of  all  the  contracts  that  would  be  made,  etc., 
and  the  army  of  employees.  It  looks  to  me  as  though  it  would  build 
up  a  Government  Department  that  would  be  unwieldy,  full  of  cor- 
ruption and  abuse,  and  I  need  not  enlarge  upon  that. 

Senator  Xeavlands.  As  I  understand  it,  the  chairman  has  re- 
quested your  Commission  to  bring  in  such  specific  amendments  as  you 
recommend  ? 

Mr.  Clements.  Yes;  I  so  understood;  and  we  will  do  our  best  to 
suo-gest  sometliing  to  canw  out  the  views  which  we  have. 

Senator  Newlands.  That  is  all. 


KEGULATION    OF   RAILWAY   RATES.  157 

STATEMENT  OF   INTEESTATE   COMMERCE    COMMISSIONER 

MARTIN  A.  KNAPP. 

Mr.  Knapp.  Mr.  Chairman  and  gentlemen  of  the  committee :  The 
doleful  picture  just  painted  in  your  presence  by  the  accomplished 
artist  of  the  Northern  Pacific  Railway  has  acted  with  such  distress- 
ing effect  upon  my  imagination  that  I  can  scarcely  summon  courage 
to  address  you.  Indeed,  I  have  been  wondering  whether  I  could  not 
escape  a  prosecution  for  treason  against  my  country  by  pleading 
guilty  to  a  charge  of  incompetency. 

In  the  course  of  your  protracted  hearings  you  have  listened  to 
some  of  the  ablest  law3'ers  and  railroad  managers  in  the  United 
States  and  to  numerous  other  persons  of  prominence  and  authority 
in  various  walks  of  life.  There  is  no  phase  of  this  many-sided 
subject  which  has  not  already  been  brought  to  ^^our  attention,  and  it 
would  be  rank  presumption  on  my  part  to  assume  that  I  can  con- 
tribute anything  of  real  value  to  this  discussion  or  otherwise  aid  your 
deliberations. 

Nevertheless,  there  are  a  few  things  I  should  like  to  say  if  your 
patience  permits,  merely  for  the  purpose  of  indicating  my  own  point 
of  view  and  suggesting  those  phases  of  the  subject  w^ith  Avhich  my 
mind  is  most  impressed.  There  appears  to  be  a  disposition  in  some 
quarters  to  discredit  the  present  law  and  belittle  the  result  of  its  oper- 
ations. It  has  been  described  as  a  crude  and  ill-considered  measure, 
which  has  made  little  advance  toward  the  accomplishment  of  its  in- 
tended purpose.  I  am  very  far  from  having  any  sympathy  with  that 
erroneous  view.  On  the  contrary,  I  regard  the  act  to  regulate  com- 
merce as  one  of  the  most  important  and  beneficent  statutes  ever  en- 
acted by  the  Congress  of  the  United  States.  When  you  consider  that 
the  enormous  power  of  the  Congress  under  the  commerce  clause  of 
the  Constitution  had  lain  dormant  for  nearly  a  hundred  years,  when 
you  call  to  mind  the  amazing  rapidity  of  railway  construction  during 
the  two  speculative  decades  that  followed  the  civil  war,  when  you 
take  into  account  the  conditions  which  had  grown  up  with  that  ex- 
traordinary development,  and  bear  in  mind  that  the  practices  which 
we  now  regard  with  reprobation  were  looked  upon  with  tolerance  and 
found  little  condemnation  in  the  average  conscience,  when  you  think 
of  the  difficulties  to  be  overcome  and  the  obstacles  encountered,  it 
seems  to  me  remarkable  that  a  law  should  have  been  passed  based 
upon  broad  principles  which  are  fundamentally  correct  and  eternally 
right,  and  which  contain  such  comprehensive  and  salutary  provisions. 

Not  even  the  distinguished  Senator,  so  long  the  chairman  of  the 
committee,  whose  persistent  efforts  deserve  chief  credit  for  that  enact- 
ment, who  has  taken  the  deepest  interest  in  the  administration  of  that 
law,  and  for  whose  personal  kindness  I  can  not  be  too  grateful, 
realizes  the  immense  progress  that  has  been  made  toward  correct 
methods  of  railroad  operation,  realizes  the  extraordinary  change 
which  has  taken  place  in  the  attitude  of  railway  managers  and  the 
public  generally  toward  the  whole  subject  of  public  regulation. 
Only  when  you  compare  the  conditions  which  were  characteristic 
and  universal  in  1887,  with  the  conditions  which  generally  prevail 
to-day,  can  you  understand  what  great  progress  has  been  made  in  the 
conduct  of  these  great  highways  of  commerce.  And  I  say  that,  if 
the  men  who  were  instrumental  in  procuring  the  passage  of  the  act 


158  REGULATION    OF   RAILWAY   RATES. 

to  regulate  commerce  have  their  names  connected  with  no  other 
measure,  they  deserve  to  rank  high  on  the  list  of  constructive  states- 
men. And  I  say  this  for  the  reason,  gentlemen,  that  I  do  not  myself 
favor  any  radical  departure  from  the  theories  and  plans  and  pur- 
poses of  the  present  law.  And  I  believe  that  the  immediate  legisla- 
tion needed  is  that  which  shall  be  built  uj^on  the  foundations  so 
wisely  laid  in  this  law,  and  which  is  directed  to  correcting  its  defects, 
strengthening  its  weak  places,  and  augmenting  its  authority'. 

If  there  is  an}^  possible  pliase  of  this  subject  which  has  been  over- 
looked, or  respecting  which  there  is  some  confusion  in  the  public 
mind,  it  is  in  confounding  things  which,  as  T  think,  ought  to  be  kept 
separate  and  distinct.  It  seems  to  be  supposed  by  many  that  the 
one  thing  needful  to  bring  about  a  railway  millennium,  although  our 
railway  friends  say  it  has  already  arrived,  is  to  increase  the  powers 
of  the  Interstate  Commerce  Commission,  and  the  controversy  seems 
to  turn  very  largely  upon  that  particular  question.  To  my  mind, 
that  is  only  one  side  of  the  subject  which  you  ought  now  to  consider. 

The  keynote  to  what  I  have  in  mind  in  this  connection  is  found  in 
the  very  clear  and  illuminating  opinion  of  the  Attorney-General.  In 
the  Congress  of  the  United  States  is  vested  plenary  and  exclusive 
powers  of  legislation  upon  this  subject.  You  can  not  delegate  that 
legislative  power  in  any  wholesale  fashion.  You  can  not  turn  over 
some  part  or  section  of  it  to  be  exercised  by  the  grantee  according  to 
his  discretion.  You  must  yourselves,  and  in  the  statute  law,  lay  down 
at  least  certain  general  rules  of  conduct.  You  may  legislate  as 
minutely  as  you  choose,  you  must  legislate  at  least  to  the  extent  of 
imposing  requirements,  placing  prohibitions,  fixing  restraints  and 
limitations,  and  if  you  fail  to  do  all  that  is  needful  in  that  regard, 
the  injustice  and  wrongdoing  growing  out  of  that  neglect,  if  any 
there  be,  can  not  be  corrected  by  simply  increasing  the  powers  of  the 
administrative  body  which  you  create.  Therefore,  it  seems  to  me 
that  you  may  appropriately  consider  what  are  the  rules  of  conduct 
prescribed  by  the  present  law  which  are  inadequate,  insufficient,  and 
lacking  in  definiteness. 

"WTiat  further  rules  ought  to  be  prescribed?  T\Tiat  shall  be  their 
character?  The  things  you  incorporate  in  the  statute  are  the  foun- 
dation of  all  the  work  that  is  done  or  can  be  done  by  the  body  whom 
you  select  to  carry  out  the  details  of  your  legislation.  For  example, 
and  I  am  liable  to  weary  you  with  an  oft-told  tale,  if  a  discrimina- 
tion against  a  community  results  from  the  fact  that  there  is  a  higher 
charge  for  a  shorter  than  for  a  longer  haul,  that  is  a  discrimi- 
nation which  can  not  be  corrected  under  the  present  law  no  matter 
how  much  authority  the  Commission  maj  have,  because  you  have 
not  declared  that  discrimination  to  be  unlawful  and  prohibited. 
No  one,  I  think,  can  read  the  fourth  section  of  the  act  to  regulate 
commerce  and  be  in  doubt  that  Congress  intended  to  provide  some 
actual  and  potential  restraint  upon  that  particular  form  of  dis- 
crimination. And,  I  may  say,  it  remains  to-da}'  much  as  it  was  then, 
not  the  greatest  evil,  but  the  most  irritating  and  obnoxious  form  of 
discrimination  that  has  been  encountered. 

Senator  Cullom.  Discrimination  as  to  localities? 

Mr.  KxAPP.  The  long  and  short  haul. 

Senator  Cullom.  Discrimination  as  to  localities? 

Mr.  Knapp.  That  particular  form  of  discrimination. 


EEGULATIOlSr    OF    RAILWAY   EATES.  159 

Now,  I  am  far  from  suggesting  that  you  ought  now  to  go  so  far 
in  recasting  the  rule  of  conduct  which  shall  have  relation  to  that  par- 
ticular type  of  discrimination  as  to  prohibit  it  altogether,  or  even  to 
limit  the  exemptions  to  such  cases  as  shall  be  sanctioned  by  the  Com- 
mission. I  am  only  suggesting  whether  you  should  not  somewhat  in- 
crease the  restraint  which  has  been  entirely  removed  from  the  dis- 
crimination effected  by  much  more  for  the  short  haul  than  the  long 
one. 

Let  me  give  you  the  most  recent  instance  which  has  come  before  the 
Commission.  The  Chesapeake  and  Ohio  Railway  crosses  the  Blue 
Ridge  Mountains  just  below  Charlottesville.  Shortly  after  passing 
over  the  mountain  it  intersects  with  the  Norfolk  and  Western,  and  a 
few  miles  farther  west  with  the  Baltimore  and  Ohio.  The  two  latter 
roads  run  down  the  Shenandoah  Valley,  and  one  of  them  by  the  Penn- 
sylvania, and  the  other  by  its  own  rules,  carries  traffic  from  that  re- 
gion to  a  common  market,  like  Philadelphia.  The  rate  on  lumber  on 
the  Chesapeake  and  Ohio  Railroad  for  100  miles  to  the  west  and  for 
a  hundred  miles  to  the  east  to  Philadelphia  is  16  cents.  In  the  Shen- 
andoah Valley  it  is  14  cents.  Therefore  the  man  who  is  producing 
some  lumber  to-day  on  the  eastern  slope  of  the  Blue  Ridge  Moun- 
tains, almost  within  sight  of  us,  must  pay  2  cents  per  hundred  pounds 
.more  to  get  lumber  to  Philadelphia  than  the  man  50  or  75  miles  far- 
ther west,  who  gets  his  lumber  transported  for  14  cents.  Now,  2 
cents  a  hundred  pounds  is  40  cents  a  ton.  That  is  $12  a  carload  of 
30,000  pounds,  and  that  is  probably  about  all  the  margin  of  profit 
there  is  in  lumber  of  that  kind. 

It  has  already  been  stated  in  your  presence  that  one  great  railway 
corporation  practically  controls  all  three  roads — the  Chesapeake  and 
Ohio,  the  Norfolk  and  Western,  and  the  Baltimore  and  Ohio.  They 
compete,  according  to  the  statement  of  their  traffic  managers,  just  as 
vigorouslj^  in  the  Shenandoah  Valley  as  they  did  when  they  were 
entirely  independent  in  oAvnership  and  management.  And  when  they 
are  charged  Avith  this  discrimination  they  set  up  that  competition  as  a 
defense.  And  I  should  like  to  inquire  of  the  lawyers  of  this  com- 
mittee whether  that  defense  is  not  complete  under  the  doctrine  of  the 
Supreme  Court  in  the  Alabama  Midland  Case  ? 

Now,  beyond  any  question  where  the  competition  of  the  carrier 
which  is  subject  to  the  act  at  the  longer  distance  point  is  the  competi- 
tion of  a  carrier  which  is  not  subject  to  the  act,  as  a  water  carrier  or 
a  foreign  railroad,  there  should  be  freedom  to  make  the  lower  charge 
to  meet  that  competition.  "Wliere  the  sole  competition  is  between 
carriers  all  of  which  are  subject  to  this  law  and  to  your  regulation,  it 
seems  to  me  that  a  different  situation  exists  and  a  different  rule  ought 
to  be  applied.  But  unless  you  create  a  different  rule  in  the  statute 
your  Commission  will  be  powerless  to  afford  any  relief  in  a  case  of 
that  kind. 

A  kindred  question  arises  respecting  import  rates.  I  thinly  I 
appreciate  both  sides  of  the  argument,  and  I  pay  a  deserved  compli- 
ment to  my  associate  on  the  Commission  who  wrote  the  report  in 
January,  1904,  when  I  say  that  you  can  not  find  a  more  comprehen- 
sive, clean-cut,  and  fair  discussion  of  that  question  than  is  contained 
in  that  report.  Here,  again,  I  am  not  suggesting  that  any  hard  and 
fast  rule  should  be  put  into  the  statute.  I  am  quite  prepared  to 
admit  that  there  are  conditions  under  which  foreign  import  traffic 


160  REGULATIOX    OF    EATLWAY    RATES. 

may  rightfully  be  carried  to  an  interior  destination  at  lower  rates 
than  the  inland  carriers  may  reasonably  charge  on  domestic  traffic; 
but  I  must  confess  to  a  feeling  of  discomfort,  to  a  suggestion  of 
injustice,  when  the  same  serA'ice  is  performed  for  the  foreigner  for 
less  than  one-third  of  the  charge  to  our  own  citizens.  Let  me  pursue 
that  a  step  further,  because  it  is  very  closely  connected  with  a  point 
I  am  now  trying  to  make. 

Complaint  came  before  us.  directed.  I  may  say.  in  a  general  way, 
against  the  Vanderbilt  system,  because  they  charged  50  cents  on  plate 
glass  from  Boston  to  Chicago  and  participate  in  carrying  plate 
glass  from  Antwerp  to  Chicago  for  40  cents.  And  the  traffic  mana- 
ger of  the  Xew  York.  Xew  Haven  and  Hartford  Eailroad.  giving  his 
testimony,  used  the  adjectives.  "  absurd."  •'  deplorable."  and  others 
of  equal  significance,  not  undertaking  to  defend  it  on  any  ground  of 
light  and  justice,  "but.  he  said.  *'  They  are  making  a  rate  from  Ant- 
werp to  Chicago,  by  way  of  Xew  Orleans  and  the  Illinois  Central  Rail- 
road, of  32  cents;  and  if  I  do  not  make  a  rate  which  approximates 
that  the  imported  traffic  will  be  carried  to  destination  by  another 
route  and  I  shall  lose  the  revenue."  Xow.  when  we  take  up  the  com- 
plaint of  the  same  parties  against  the  Illinois  Central,  as  we  presently 
shall,  and  say,  "  How  does  it  happen  that  you  are  carrying  imported 
glass  from  Antwerp  through  New  Orleans  to  Chicago  for  32  cents 
and  to  St.  Paul  and  Minneapolis  for  38  cents,  when  you  charge  75 
cents  from  New  Orleans  to  Chicago  and  40  cents  from  Chicago  to 
St.  Paul."  he  will  say.  '•  I  am  obliged  to  do  it.  because  the  New  York, 
Xew  Haven  and  Hartford  Railroad  makes  a  through  rate  from  Ant- 
werp to  Chicago  of  40  cents,  which  I  am  obliged  to  meet." 

Senator  Keax.  How  do  they  ship  that  by  the  New  York,  New 
Haven  and  Hartford  Railroad  ? 

Mr.  KxAPP.  I  think  by  the  Poughkeepsie  Bridge  route.  I  rather 
assimie  that.  I  think  that  is  their  present  route  for  that  description 
of  traffic  from  Boston. 

Now.  I  am  only  mentioning  those  instances  for  the  purpose  of 
pointing  out  to  you  that  unless  you  put  some  restraint  upon  that  form 
of  discrimination  in  the  statute,  the  Conmaission  will  be  powerless 
to  remedy  the  injustice.  The  same  thing  applies  to  private  cars  and  to 
these  terniinal  railroads.  It  certainly  is  not  natural  for  the  Commis- 
sion to  admit  that  the  law  which  it  is  appointed  to  administer  does 
not  give  it  jurisdiction  over  offenses  which  are  brought  to  its  atten- 
tion, but,  personally,  I  have  never  been  able  to  see  in  the  act  to  regu- 
late commerce  or  in  the  supplemental  law  anything  which  enabled 
the  Commission  with  any  effectiveness,  if  at  all.  to  reach  the  dis- 
criminations which  now  occur  and  which  have  become  so  acute  with 
regard  to  private  car  refrigeration  charges  and  the  operations  of 
these  terminal  railroads. 

And  again  I  refer  to  the  subject,  not  with  any  disposition  to  go 
over  it  irT  detail,  but  to  impress  it  upon  you  that  unless  you  put  some 
restrictions,  some  limitations,  some  requirements,  some  obligations 
in  the  statute  when  you  come  to  amend  it  the  regulating  body,  which 
is  your  subordinate,  will  not  be  able  to  afford  any  relief  in  cases  of 
that  kind.  Now.  let  me  take  a  minor  one.  of  which  I  think  very 
little  has  been  said,  but  which  to  me  seems  of  very  considerable  im- 
portance, not  only  in  itself,  but  because  it  is  connected  with  another 


BEGITLATIOX    OF    RAILWAY   EATES.  161 

subject  of  very  much  larger  significance  and  about  which  considerable 
has  been  said. 

Under  the  present  law  any  railroad  or  any  two  or  more  railroads 
operating  together  under  a  joint  tariff  may  reduce  a  rate  on  three 
days"  notice  and  advance  a  rate  on  ten  days'  notice,  and  instances 
have  been  brought  to  my  attention  in  an  unolTicial  way  of  operations 
which  are  as  offensive  to  the  moral  sense  and  as  injurious  in  their 
effect  as  any  check  ever  gi^en  for  a  rebate.  Xow.  of  course,  as  long 
as  you  leave  it  in  the  law  that  those  changes  can  be  made  upon  that 
short  notice  any  injustice,  any  operation  which  is  the  equivalent  of  a 
rebate  will  be  beyond  the  power  of  any  commission  to  correct. 

Senator  DoLLn-ER.   "What,  exactly,  have  you  in  mind  i 

Senator  Ivlax.    Midnight  tariffs. 

Mr.  KxAPP.  ^lidnight  tariffs.  Read  the  very  remarkable  address 
which  Mr.  Stickney  has  filed  here. 

Senator  Dollr-er.  I  had  the  pleasure  of  hearing  that  when  he  read 
it  before  the  Economic  Association. 

Mr.  Kx.vpp.  One  of  my  associates  made  this  observation,  that  ;Mr. 
Sticlaiey  is  always  surprising,  whether  he  makes  a  speech  or  files  a 
tariff'.  Within  a  fortnight  1  have  had  a  talk  with  one  of  the  most 
successful  and  prominent  traffic  officials  in  the  United  .States,  who  to- 
day controls  absolutely  the  entire  traffic  of  one  of  the  largest  systems 
in  the  Lnited  States,  and  we  were  talking  upon  this  subject;  and  in 
the  most  emphatic  manner  he  indorsed  my  proposition.  And  when 
I  said  that  notice  ought  to  be  thirty  days  or  sixty  days,  he  said  it 
ought  not  to  be  less  than  ninety  days. 

Senator  Dolli^-ek.   How  would  that  help  it  ? 

Mr.  KxAPP.  You  can  not  make  contracts  so  far  ahead,  ordinarilv. 

Senator  Dollt^ter.  A  man  might  go  and  get  ready  for  business  of 
that  sort  in  ninety  as  well  as  thirty  days.  I  reckon. 

Mr.  KxAPP.  It  would  be  much  more  difficult  and  transactions  which 
give  offense  would  be  much  less  liable  to  occur. 

•Senator  Doluhtee.  But  if  a  rate  could  not  be  reduced  without 
ninety  days'  notice,  would  not  that  operate  to  a  very  great  disad- 
vantage in  a  thousand  other  directions  f 

^Ir.  KxAPP.  I  was  about  to  add  that  I  surely  would  not  recommend 
any  hard  and  fast  rule  be  put  in  the  statute.  That  is  one  of  the  cases 
where  you  should  leave  to  your  Commission  some  discretion,  at  least 
in  cases  of  emergency,  and  perhaps  not  go  further  than  to  establish  a 
general  rule.  Because  in  some  directions  vour  legislation  should  be 
general;  in  other  cases,  more  definite  and  exact,  according  as  the 
nature  of  the  circimistances  might  require. 

Let  me  give  another  illustration:  Some  few  years  ago  I  was  really 
ambitious  to  get  this  law  amended  on  what  I  conceived  to  be  wise 
and  workable  lines,  and  I  was  indiscreet  enough,  perhaps,  to  attempt 
to  cooperate  with  some  railroad  lawyers  and  experienced  traffic 
officials  in  preparing  suitable  amendments  to  this  law:  and  with 
some  assistance  I  prepared  a  draft,  which  I  sent  to  the  late  Judge 
Green,  whom  some  of  you  knew,  at  that  time  the  general  counsel  of 
the  Vanderbilt  system,  in  which  I  proposed  a  thirty-day  notice,  with 
the  right  of  the  Commission  to  allow  any  short  notice.  "\Mien  the 
draft  came  back  the  only  change  in  it  was  that  he  had  substituted 
sixty  days  for  thirty  days. 
T4lA— 4:>5 11 


162  REGULATION    OF    RAILWAY   RATES. 

Now,  I  want  to  speak  of  what  that  particidar  thing  suggests  to 
me  in  somewhat  hirger  relations.  In  the  course  of  these  hearings, 
so  far  as  I  have  been  enabled  to  keejD  in  touch  with  them,  I  observe 
a  great  deal  has  been  said  about  the  necessity  of  flexibility  in  tariffs, 
of  traffic  managers  being  able  to  accommodate  their  rates  to  fluc- 
tuating commercial  conditions,  and  one  of  the  arguments  advanced 
against  remodeling  this  law  in  any  material  respect  in  that  the  tend- 
ency of  any  actual  control  through  a  Government  agency  of  the 
rates  made  by  the  carriers  would  be  toward  ironclad  rules,  and 
mileage  rates,  and  limitations  of  that  sort.  Of  course,  I  am  far 
from  admitting  that  any  such  consequence  would  follow  either  im- 
mediately or  remotely  from  a  grant  of  authority  far  greater  than 
has  been  proposed  by  any  pending  measure.  But  when  I  ran  over 
the  statements  of  some  prominent  traffic  officials  in  which  they  em- 
phasized the  necessity  of  frequent  changes  in  tariffs,  the  necessity 
of  adapting  their  rates  to  changing  connnercial  conditions,  I  hap- 
pened to  think  of  one  or  two  instances  which  I  thought  I  might 
bring  to  your  attention. 

The  most  important  part  of  the  United  States  is  what  is  known 
as  "  official  classification  territory  '" — the  section  north  of  the  Ohio  and 
Potomac  and  east  of  the  Mississippi  rivers.  The  class  rates  which 
govern  most  merchandise  and  articles  of  manufacture  and  ordi- 
nary household  consumption  are  adjusted  upon  the  basis  of  the 
New  York-Chicago  rate — places  nearer  Xew  York  taking  a  percent- 
age below  the  Chicago  rate,  and  places  more  to  the  west  taking  a 
percentage  above.  Now,  not  only  has  that  basis  of  rates  in  all  that 
territory'  remained  unchanged  since  1887,  but  so  have  the  rates  re- 
mained unchanged.  And  you  gentlemen  know  as  well  as  I  do  the 
changes  that  have  occurred  and  the  fluctuations  that  have  happened 
in  commercial  conditions  in  that  territory  during  that  period. 

Senator  Dollivek.  They  seem  to  have  been  pretty  generally  shaken 
up  along  about  1900. 

jNIr.  Knapp.  "When  thej'  made  very  numerous  advances  by  simply 
changing  the  classification  of  the  articles;  but  the}'  did  not  change 
the  rates  or  adjustments  between  localities. 

Senator  Dolliver.  Simply  the  classification  ? 

Mr.  KxAPP.  Simph'  the  classification — moved  an  article  up  from 
the  sixth  class  to  the  fifth,  or  from  the  fifth  to  the  fourth — an  ex- 
tremely simple  process,  and  then,  of  course,  it  operates  under  the 
principle  of  adjustment  throughout  the  entire  territory. 

Now,  take  another  illustration,  which,  to  my  mind,  is  more  ap- 
posite. T  take  it  there  is  no  agricultural  product  the  price  of  which 
has  shown  such  wide  fluctuations  in  the  last  few  years  as  cotton.  It 
is  one  of  the  great  staple  articles  of  the  country:  the  most  valuable, 
per  pound,  of  anything  that  grows  out  of  the  ground  in  large  vol- 
ume. More  than  half  of  it  is  exported,  and  you  know  the  price  has 
gone  from  scarceh'  above  5  cents  to  16  or  17  cents.  And  if  there 
is  am'  article  which  woidd  seem  to  be  susceptible  to  market  fluctua- 
tions and  the  changes  in  commercial  conditions  it  must  l)e  cotton. 
But  an  inspection  of  the  tariffs  will  show  you  that  the  rates  on  cotton 
have  not  been  changed  in  ten  years. 

There  has  been  no  material  change.  I  think,  in  any  cotton  rate  in 
]nore  than  ten  years,  except  that  certain  reductions  have  been  made  in 
the  State  of  Texas  by  the  commission  of  that  State. 


KEGULATIOISr    OF    KAIL  WAY   EATES.  163 

Now,  when  I  observe  instances  of  that  kind,  when  the  aljlest  and 
most  experienced  traffic  officials  tell  me  that  there  is  no  sort  of  reason 
for  500  to  1,000  changes  in  interstate  tariffs  every  twenty-four  hours, 
as  our  files  show  there  are,  j'ou  must  not  be  surprised  if  I  fail  to  ac- 
cejjt  at  par  value  all  that  is  said  here  about  the  necessity  of  adapting 
rates  to  commercial  conditions.  Undoubtedly,  when  you  take  a  con- 
siderable period  of  time  great  influences  do  operate  to  an  extent 
which  may  justly  require  material  modifications  in  freight  charges, 
but  to  my  mind  it  is  quite  unsuitable  that  the  little  surface  fluctua- 
tions in  trade  should  find  expression  in  extended  changes  in  the 
daily  tariffs.  I  believe  that  those  surface  currents  should  adjust 
themselves  to  the  tariffs  and  not  the  tariffs  to  the  currents.  And  I 
am  saying  this,  gentlemen,  not  as  a  result  so  much  from  my  own  ob- 
servation or  from  any  a  priori  view  of  the  case  as  because  of  the  state- 
ments made  and  arguments  submitted  to  me  by  practical  railroad 
men  of  the  highest  distinction. 

And  that  suggests  another  view  to  my  mind  which  I  think  may 
properly  be  taken  into  account  even  by  our  railroad  friends.  As  I 
said,  I  am  very  far  from  believing  that  there  should  be  anything  more 
than  the  most  inconsiderable  tendency,  if  any  at  all,  toward  the 
adjustment  of  rates  on  a  mileage  basis,  and  I  think. the  prosperity  of 
the  railroads,  the  develoi^ment  of  the  different  sections  of  the  country 
and  their  industries,  justify,  the  making  of  rates  upon  what  might  be 
called  a  commercial  basis  rather  than  any  distance  basis;  but  do  you 
realize  Avhat  an  enormous  power  that  is  putting  into  the  hands  of  the 
railroads?  That  is  the  power  of  tearing  down  and  building  up. 
That  is  the  power  which  might  very  largeh^  control  the  distribution 
of  industries.  And  I  want  to  say  in  that  connection  that  I  think  on 
the  whole  it  is  remarkable  that  that  power  has  been  so  slightly 
abused.  But  it  is  there.  My  esteemed  friend,  Mr.  Elliott,  has  just 
told  3^ou  that  the  rates  on  wool  from  IMontana  must  be  adjusted  with 
reference  to  the  rates  on  wool  from  Kentucky.  '\A'ell,  grant  it.  But 
suppose  he  should  see  fit  to  adjust  his  rates  on  wool  so  that  the}^  moved 
to  the  Pacific  coast  and  it  became  for  the  interest  of  his  railroad  to 
change  that  adjustment.  Is  that  to  be  left  entirely  to  his  judgment? 
Or  it  comes  back  to  the  question  which  Senator  Dolliver  asked  of 
him,  in  substance.  After  all,  are  the  railroads  to  be  left  virtuallv 
free  to  make  such  rates  as  they  conceive  to  be  in  their  interests? 
Undoubtedly  their  interest  in  large  measure  and  for  the  most  part 
is  the  interest  of  the  connnunities  they  serve.  Undoubtedly^  in  large 
measure  and  for  the  most  part  they  try  as  honestl}^  and  as  con- 
scientiously as  men  can  to  make  fair  adjustments  of  their  cliarges. 
But  suppose  they  do  not.  Is  there  not  to  be  an}'"  redress  for  those 
who  suffer?     That  is  really  the  question. 

And  since  I  have  said  so  much  on  that  subject,  if  you  will  pardon 
me,  I  will  venture  to  pursue  it  for  a  moment  in  another  direction, 
although  it  leads  us  into  the  domain  of  economics.  Supj)ose  it  were 
true  that  a  more  potent  exercise  of  Government  authority  and  the 
adjustment  of  rates  tended  somewhat  to  increase  the  recognition  of 
distance,  with  the  result  of  producing  a  greater  diffusion  of  industry 
rather  than  its  concentration.  I  am  not  a  political  economist,  nor 
competent  to  speak  on  a  subject  of  such  large  dimensions,  but  I  can 
not  believe  that  all  those  institutions,  laws,  administrations  which 
operate  to  the  concentration  of  industries  and  population  are  alto- 


164  REGULATION    OF    RAILWAY   RATES. 

gether  to  be  commended.  Thej^  may  result  in  greater  aggregate 
wealth  for  the  country.  I  am  prepared  to  admit  that  they  do;  but  do 
they  result  in  happier  homes,  better  lives,  greater  social  comfort?  T 
have  some  doubt  of  it. 

To  state  one  other  instance  of  what  I  am  trj^ing  to  say — of  the 
things  that  you  must  put  in  the  law  if  the  thing  is  to  be  regulated — 
and  that  is  this  question  of  compelling  carriers  having  physical  con- 
nection to  unite  in  making  through  routes  and  through  rates.  You 
have  already  been  told.  I  dare  say.  that  it  is  not  probable  that  another 
trunk  line  will  be  constructed  at  any  early  date,  and  that  such  rail- 
way development  as  takes  place — say,  east  of  Chicago — must  mostly 
be  in  branches  and  laterals,  in  extensions  of  existing  systems.  Well, 
suj^pose  some  enterprising  gentlemen  build  a  railroad  in  West  Vir- 
ginia which  at  one  end  toucTies  the  Baltimore  and  Ohio  or  the  Penn- 
sylvania. What  are  they  going  to  do  with  it  when  they  get  it  there? 
If  they  can  not  involve  public  authority  to  make  some  equitable 
arrangement  with  reference  to  joint  rates  and  the  interchange  of 
traffic,  they  may  be  A^ery  much  disappointed  in  the  outcome  of  their 
enterprise.  That  only  suggests  again  that,  if  anything  of  that  kind 
happens,  if  there  is  danger  of  injustice  of  that  sort,  the  safeguard 
must  be  found,  not  in  anything  that  the  Commission  can  do  primarily, 
but  in  some  restriction  or  requirement  in  the  law  you  pass. 

Senator  Dolliver.  In  such  a  case  would  you  have  the  laAv  define 
the  portion  of  the  rate  to  go  to  those  roads,  the  portion  which  they 
would  be  entitled  to? 

Mr.  Knapp.  Oh,  no. 

Senator  Dolliver.  The  ratio? 

Mr.  Knapp.  Probabh^  you  could  go  no  further  there  with  useful- 
ness than  in  a  general  way  to  put  the  obligation  upon  the  carriers, 
with  the  power  in  your  regulating  body,  if  they  ctid  not  agree,  to 
make  the  division  and  to  prescribe  rules  of  interchange. 

So,  without  pursuing  that  branch  of  the  subject  further,  I  venture 
again  to  say  that  the  primary  thing  is  to  see  what  restrictions,  what 
obligations.^  what  prohibitions,  what  restraints,  what  limitations  are 
to  be  placed  upon -the  interstate  railways,  and  those  must  all  be  in  the 
statute:  or  else  they  Avill  not  be  the  subject  of  regulation. 

Senator  Dolliver.  The  thing  we  want  to  find  out  is  just  what  we 
want  to  put  in  the  statute. 

Mr.  Knapp.  And  you  see  all  that  precedes  the  question  of  your 
Commission  and  what  it  can  do.  And  when  I  use  the  term  Commis- 
sion I  do  so  for  convenience,  not  necessarily  referring  to  tlie  present 
Commission,  but  as  describing  whatever  subordinate  body  you  create 
and  must  create  for  the  purpose  of  ascertaining  whether  the  rules 
you  lay  down  are  conformed  to.  and  if  not  to  exercise  such  authority 
as  you  may  give  it  to  bring  about  that  conformity,  and  all  that  which 
I  have  tried  to  suggest  precedes  the  question  of  the  subordinate  tri- 
bunal. 

Xow  the  second  question  is,  'WTiat  sort  of  a  tribunal  is  that  going  to 
be?  We  are  told  at  this  late  day  that  no  administrative  or  legisla- 
tive tribunal  is  necessary ;  that  whatever  j^rinciples  of  regulation  you 
adopt  and  promulgate  may  all  be  applied  and  enforced  in  the  Federal 
courts.  I  suppose  I  must  be  lacking  in  quick  perception  and  ready 
receptiveness.  but  I  have  not  yet  been  able  to  see  how  that  scheme 
could  be  made  to  work.     To  my  notion  regulation  is  legislative.     It 


EEGULATION    OF    RAILWAY    RATES.  165 

must  begin  in  the  nature  of  the  case  with  the  tariff — that  is  to  say,  it 
must  begin  with  requiring  the  announcement  by  the  carrier  of  what 
he  is  going  to  charge.  And  then  tAvo  questions  at  once  arise.  One  is, 
Wlio  will  see  to  it  that  the  rate  that  it  says  it  is  going  to  charge  is 
actually  charged  to  everybody  alike?  And  the  other  question  is.  If 
that  rate  is  wrong,  how  is  it  going  to  be  corrected?  And  the  two  are 
very  unlike  propositions. 

A  tariff  is  a  law.  It  is  a  rule  of  action  of  general  application. 
So  long  as  it  is  in  force  it  has  all  the  characteristics  and  all  the  bind- 
ing obligations  of  a  statute.  To  depart  from  it  is  a  misdemeanor,  and 
it  does  not  make  any  difference  whether  that  tariff  law  is  passed  by 
the  railroads,  made  by  a  commission,  or  enacted  by  Congress.  In 
either  case,  if  that  law  is  wrong  the  only  thing  to  do  is  to  change  the 
law.  If  that  law  is  broken,  then  the  thing  to  do  is  to  punish  the  man 
who  broke  it.  The  courts  are  constituted  to  apply  and  enforce  law 
and  to  punish  those  who  violate  law.  The  legislature  is  ordained  to 
make  laws  and  change  laws,  and  in  the  very  nature  of  the  case  the 
proposal  to  use  the  methods  of  a  court  to  deal  with  a  purely  legisla- 
tive question  is  incongruous  and  unsuitable. 

Senator  Dolliver.  It  is  rather  an  extreme  thing,  it  seems  to  me,  to 
say  that  a  railroad  tariff  is  in  the  nature  of  a  law. 

Mr.  Knapp.  Precisely  that.     A-VTiat  else  is  it  to-day? 

Senator  Dolliver.  We  had  that  law  \A'ell  broadened  by  various  in- 
terpretations— — 

Mr.  Knapp.  Of  course  it  is  not  statute  law. 

Senator  Dolliver.  Is  it  a  law  of  the  United  States  in  any  sense  of 
the  word  ? 

Mr.  Knapp.  Not  in  the  sense  of  being  a  legislative  enactment;  not 
in  the  sense  that  it  is  a  principle  Avhich  has  been  developed  by  the 
adjudications  of  courts;  but  in  the  sense  that  it  is  a  rule  of  conduct 
of  general  application  binding  upon  everybody. 

Senator  Dolliver.  But  prescribed  not  by  the  power  of  the  State, 
but  b}'  some  private  business  enterj^rise  ? 

Mr.  Knapp.  Prescribed  by  the  railroads ;  but  I  am  only  suggesting. 
Senator,  that  in  its  relation  to  the  public,  and  with  reference  to  the 
question  of  whether  that  law  is  right  or  wrong  it  might  as  well  have 
been  made  by  the  Commission  or  enacted  b}'  the  Congress;  and  if 
you,  as  you  might,  should  say  by  statute  that  the  rate  on  grain  from 
Chicago  to  Baltimore  shall  be  13^  cents,  and  from  Chicago  to  Phila- 
delphia 14  cents,  and  from  Chicago  to  New  York  15  cents — and 
somebody  said  that  is  a  discrimination  against  New  York — would  it 
not  be  rather  absurd  to  sav  that  vou  must  go  to  court  and  have  it 
enjoined?     It  is  a  law  that  you  have  passed. 

Senator  Dolliver.  I  do  not  see  how  a  thing  is  a  law  that  a  man  may 
go  into  court  and  assert  is  illegal — ^contrary  to  law — and  recover  dam- 
ages for  an  excessive  charge.  If  I  imderstand  the  decision  of  the 
Supreme  Court  a  man  can  take  one  of  those  tariff'  rates  and  go  into 
court  and  state  that  it  is  unreasonable  and  illegal  and  get  the  court 
busy  to  finding  damages. 

Senator  Cullom.  Of  course  you  could  not  do  that  if  it  had  been 
enacted  by  the  power  that  makes  the  statute. 

Mr.  Knapp.  1  am  aware  that  is  said,  and,  of  course,  I  am  not  using 
the  term  "  law  "  in  the  sense  of  statute ;  I  am  only  suggesting  that 
it  is  a  legislative  act,  and  it  does  not  matter  who  legislates  it  into 


166  EEGULATION    OF   HAIL  WAY   KATES. 

existence,  whether  it  is  the  carrier  or  a  commission  or  the  courts;  if 
it  is  wrong  it  ought  to  be  changed  and  amended. 

Senator  Cut.i.om.  It  is  misleading,  is  it  not,  to  call  it  a  law  ? 

Mr.  Knapp.  Oh,  I  suppose  it  is:  I  only  used  that  to  illustrate, 
for  Avant  of  a  better  term,  the  difference  between  those  obligations 
which  exist  between  the  carrier  and  the  public  and  which  are  of 
general  application  and  the  rights  of  individuals  which  come  in 
controversy-  in  court. 

Senator  Dollivee.  I  raised  the  question  not  for  mere  controver- 
sial purposes,  but  because  it  has  been  repeatedly  suggested  here  that 
the  publication  of  this  railroad  schedule  here,  which  has  been  re- 
quired by  statute,  gives  it  a  certain  sanctity  that  protects  if  from 
individual  complaints  as  to  its  injustice  or  illegality,  and  it  seems 
to  me  that  it  adds  nothing  to  it. 

Mr.  KxAPP.  Well,  we  do  not  know  yet  about  that.  I  know  we  are 
all  accustomed  to  speak  about  the  right  of  any  person  who  has  paid 
what  he  regards  as  an  excessive  charge  to  a  carrier  to  bring  his 
action  in  damages.  Theoretically,  of  course,  that  right  exists. 
Have  you  ever  known  it  to  be  exercised?  We  are  accustomed  to 
speak  of  that  as  though  there  were  cases  of  frequent  occurrence. 

Senator  Doi.liver.  I  know  they  are  not  frequent,  but  they  have 
been  sufficiently  frequent  .for  the  courts  to  lay  down  the  general 
principles  which  govern  the  rights  of  the  parties  of  the  cases. 

Mr.  KxAPP.  Undoubtedly ;  and  in  such  a  case  as  that  the  court  nec- 
essarily must  determine  what  would  be  a  reasonable  rate  for  the 
purpose  of  fixing  the  measure  of  damages. 

Senator  DorjjVER.  If  you  will  permit  me  to  call  your  attention  to 
the  case  of  Regan  v.  the  Farmers'  Loan  and  Trust  Company  (154 
U.  S.,  p.  3G2) ,  there  the  court  say : 

It  has  always  been  recognized  that  if  the  carrier  attempted  to  charge  a  ship- 
per an  unreasonable  sum  the  courts  had  jurisdiction  to  inquire  into  that  matter 
and  award  to  the  shipper  any  amount  exacted  from  him  in  excess  of  a  rea- 
sonable rate;  and,  also,  in  a  reverse  case,  to  render  judgment  in  favor  of  the 
carrier  for  the  amount  found  to  be  a  reasonable  rate. 

Mr.  KxAPP.  There  is  no  question  about  the  doctrine.  My  question 
was.  Have  you  known  of  any  such  suit  being  brought  against  the 
railroad? 

Senator  Dolliver.  I  think  that  must  have  been  some  such  suit. 

Mr.  Knapp.  I  suppose  there  are  much  better  and  more  diligent 
lawyers  than  I  am.  but  I  have  never  found  a  reported  case  and  would 
be  very  much  obliged  if  any  of  my  friends  will  call  my  attention  to 
one  where  there  has  been  such  a  suit  brought  against  the  railroad 
company. 

Senator  Dolliver.  Section  15  of  the  interstate-commerce  act  seems 
to  have  contemplated  such  a  double  proceeding  to  correct  the  unrea- 
sonable rate  and  to  collect  damages  in  all  these  cases  where  complaints 
are  made  of  the  rates.  I  do  not  know  whether  any  of  those  cases  have 
gone  to  the  courts  or  not. 

Mr.  KxAPP.  And  it  jDerhaps  must  remain  an  open  question  until 
it  is  decided  whether  an  action  will  lie  to  recover  an  alleged  excessive 
charge  where  that  charge  is  in  accordance  with  the  tariff'  filed  as 
required  by  law.  I  do  not  know  what  the  law  is  until  that  question 
shall  have  been  decided. 


KEGULATION    OF    RAILWAY   RATES.  167 

Without  pursuing  that  subject  too  far — because  the  question  has 
become  familiar  to  you  and  you  have  to  decide  it — I  only  make  this 
suggestion.  At  besti  and  at  the  most,  the  remedy  which  can  be  admin- 
istered by  the  courts  is  uncertain,  limited,  indirect.  If  you  were  to 
adopt  that  plan,  you  must  be  prepared  to  enter  upon  some  years  of 
litigation  to  find  out  just  how  much  a  court  can  do,  how  much  it  will 
do,  and  how  it  will  do  it.  And  I  have  rather  wondered  whether  all 
this  insistence  that  all  these  questions  should  go  to  the  courts  instead 
of  to  a  commission  because  a  commission  is  incompetent  is  not  a 
little  insincere. 

Now,  is  it  really  because  it  is  believed  that  the  men  who  would  be 
upon  a  commission  are  incapable  of  determining  these  questions? 
Including  the  five  first  appointed,  fourteen  men  have  been  appointed 
on  the  Interstate  Commerce  Commission.  Excluding  myself  and  one 
other  who  never  studied  law  or  was  admitted  to  the  bar,  I  undertake 
to  say  that  every  one  of  the  other  twelve  was  qualified  by  ability,  legal 
attainments,  professional  standing,  and  in  other  respects  for  appoint- 
ment on  the  Federal  bench.  I  believe  those  twelve  men,  from  the  great 
jurist.  Judge  Cooley,  to  the  distinguished  statesman.  Senator  Cockrell, 
will  compare  very  favorably  with  the  average  of  the  men  who  have 
been  appointed  to  the  district  and  circuit  court  benches  of  the  United 
States  in  the  last  fifteen  years;  and  I  find  myself  wondering  how  it 
is  that  the  same  men  who  as  judges,  with  the  multifarious  duties  of 
that  office,  would  be  so  competent  and  so  highly  qualified  to  pass  upon 
these  traffic  problems,  are  unfit  and  incompetent  when  they  are  com- 
missioners and  not  judges.  Candidly,  is  not  this  the  reason,  that 
our  friends  know  perfectly  well  that  a  legislative  tribunal  can  con- 
trol rates,  if  it  has  the  authority,  and  they  know  that  courts  can  not 
control  rates  effectively,  no  matter  how  much  authority  you  may 
attempt  to  give  them?  Is  not  that  the  real  reason  why  a  court  is 
preferred  to  a  commission  ? 

There  is  an  old  Italian  proverb  to  this  effect, "  If  you  want  a  thing 
done  do  it  yourself;  if  you  don't  w^ant  it  done  get  somebody  else." 
So  I  venture  to  say  that  if  you  really  want  to  regulate  railroads,  reg- 
ulate them  yourselves  by  legislation  and  by  a  legislative  tribunal. 
If  you  do  not  want  to  regulate  them,  get  the  courts  to  do  it. 

1  want  to  get  through  in  a  few  minutes.  "WTiat  is  the  use  of  my 
going  over  the  ground  that  has  been  traversed  so  many  times  by  men 
much  more  competent  to  discuss  these  questions  than  I  am?  You 
first  settle  what  the  la  ay  shall  require,  prescribe,  enjoin,  and  you  then 
decide  what  tribunal  shall  be  selected  to  give  force  and  effect  to  those 
requirements.  That  tribunal  must  be  legislative,  in  my  judgment,  to 
accomplish  the  purpose  of  settling  the  questions  that  arise. 

One  of  the  questions  is,  How  much  authority  are  you  going  to  give 
that  tribunal?  I  do  not  care  to  discuss  that.  It  has  been  thrashed 
over  here  for  six  wrecks,  and  I  could  not  add  a  thing  to  the  discussion 
one  way  or  the  other.  If  you  think  there  is  any  way  to  accomplish 
the  thing  that  ought  to  be  done,  short  of  giving  your  administrative 
tribunal  the  power  to  substitute  a  reasonable  rate  for  an  unreasonable 
one,  I  shall  be  very  glad  to  have  you  find  the  way. 

Then  the  other  question.  What  is  to  be  the  effect  of  any  order 
made  by  the  tribunal  which  you  create?  One  of  the  embarrassments 
which  1  have  felt  from  the  beginning  has  been  that  under  the  existing 
law  when  the  Commission  has  heard  one  of  these  complicated  ques- 


168  KEGULATION    OF    RAILWAY   RATES. 

tions  relating  to  what  is  a  reasonable  rate  or  a  properh'  adjusted  rate 
and  has  reached  a  conclusion  and  made  its  report  and  given  direction 
to  the  carrier  accordingly,  if  its  view  of  that  situation  is  not  accepted, 
then  the  Commission  must  become  a  suitor  in  the  courts  to  enforce  its 
own  determination. 

Now,  speaking  for  myself,  and  I  think  upon  that  point  I  am  in  har- 
mony with  the  views  of  all  my  associates,  I  do  hope  at  least  this  will 
be  done.  Whatever  authority'  is  given,  let  the  exercise  of  that  au- 
thority be  final ;  let  it  take  effect  by  its  own  force  within  such  reason- 
able time  as  you  maj^  prescribe  or  under  any  conditions  that  j'^ou  may 
prescribe,  but  when  a  commission  has  made  such  a  ruling"  as  it  is 
authorized  by  you  to  make,  whether  that  ruling  is  to  be  limited  to 
the  present  or  extend  into  the  future,  then  the  Commission's  work 
should  be  finished.  And  the  carrier  should  be  put  in  this  position: 
That  it  must  either  accept  that  ruling  and  act  accordinglv,  whether 
that  be  merely  a  ruling  of  condemnation  or  a  ruling  of  requirement 
for  the  future,  or  must  itself  go  to  court  and  get  rid  of  the  ruling. 
Now,  that  does  not  involve  any  radical  change  from  the  present  law, 
because  it  is  now  provided  that  the  findings' of  the  Commission  are 
prima  facie  correct.  So  that  to-day  if  a  suit  is  brought  to  enforce  a 
disregarded  order  of  the  Commission  you  can  simply  go  into  court 
and  present  your  case,  and  there  is  your  prima  facie  case,  and  the 
burden  of  proof  is  on  the  carrier.  In  other  words,  you  are  not  mak- 
ing so  radical  a  change  as  to  trasfer  the  burden  of  proof  by  adopting 
the  plan  I  suggest,  and  you  do  relieve  the  Commission  of  what  to  me 
has  seemed  an  embarrassing  attitude,  one  that  at  least  furnished 
some  excuse  for  the  criticism  that  its  functions  are  inconsistent. 

Senator  Kean.  Let  me  ask  you  a  question  just  there.  If  the  fixing 
of  a  future  rate  is  a  legislative  act,  then  the  court  probably  could  not 
review  it? 

Mr.  KxAPP.  Senator  Kean.  I  may  not  say  anything  here  unless  I 
speak  the  absolute  truth  as  I  see  it,  and  your  observation  suggests  a 
very  serious  question.  All  the  answer  I  can  make  is  that  f  do  not 
know.  I  have  believed  thai  if  a  law  conferred  upon  a  commission 
the  authority  in  such  a  case  as  this — pne  of  these  contested  cases — to 
substitute  a  reasonable  rate,  that  the  carrier  could  go  to  court  on 
the  theory  that  the  Commission  had  exceeded  its  authority  by  pre- 
scribing an  unreasonable  rate.  Now\  how  far  you  can  give  jurisdic- 
tion to  courts  or  to  wdiat  extent  they  will  take"^  it  I  think  no  lawyer 
can  predict  with  any  confidence  until  the  question  has  been  decided. 

Senator  Kean.  Then,  in  any  act  we  drew,  if  we  gave  the  Commis- 
sion power  to  fix  the  rate,  if  the  court  had  any  jurisdiction  it  would 
have  to  be  decided,  would  it  ? 

Mr.  Knapp.  That  is  the  way  the  matter  rests  in  my  mind.  I  have 
been  very  strongly  inclined  to  the  opinion,  already  expressed  in  your 
hearing,  that  there  is  no  such  difference  as  has  been  assumed  between 
a  rate  merely  unreasonabl}'  low  and  a  rate  that  is  confiscatory.  I 
should  think  it  not  unlikely  that  the  Supreme  Court  will  some  day 
hold,  when  the  question  is  presented,  that  a  rate  imposed  upon  a 
carrier  by  public  authority  which  is  unreasonably  low,  which  is  less 
than  in  justice  and  fair  dealing  that  carrier  is  entitled  to  receive  is 
pro  tanto,  a  confiscation  of  that  carrier's  property.  Of  course,  if  that 
view  prevails  and  that  is  held  to  be  the  law,  then  the  carriers  have 
every  remedy  under  the  Constitution  which  can  be  conferred  upon 


EEGULATIOE"    OF    RAILWAY   RATES.  169 

them  by  statute.  But  suppose  you  accept  the  proposition  that  there 
is  a  margin — jDossibly  a  wide  margin — between  a  rate  that  is  unrea- 
sonably low  and  a  rate  that  infringes  upon  the  constitutional  rights 
of  the  carriers.  Is  that  a  sufficient  reason  for  not  granting  the  au- 
thority? Of  course,  the  Commission  is  likely  to  make  mistakes. 
The  only  gentlemen  who  have  appeared  before  you  and  freely  claimed 
that  they  never  made  a  mistake  are  these  railroad  managers. 

Senator  Kean.  I  do  not  think  that  is  so. 

Mr.  Knapp.  I  do  not  say  that  with  the  utmost  seriousness,  of 
course,  but  in  jDoint  of  fact  I  do  not  remember,  in  running  over 
the  records  of  your  hearings,  that  any  railroad  manager  has  ever 
intimated  that  he  has  ever  made  an  erroneous  rate,  or  in  any  resj^ect 
unjustly  treated  his  patrons.  Now,  I  can  not  claim  that  for  myself, 
as  a  member  of  the  Commission.     I  have  made  mistakes. 

Senator  Clapp.  Judge,  the  record  which  we  have  here  shows  that 
since  1897,  the  time  of  the  Maximum  Rate  case,  when  it  was  definitely 
decided  that  the  Commission  could  give  no  such  legal  effect  to  the 
recommendation  of  the  substituted  rate  as  they  could  give  to  the 
condemnation  of  the  existing  rate,  that  since  that  time,  of  the  cases 
where  the  Commission  has  condemned  a  rate  and  recommended 
another  rate,  and  the  condemnation  has  stood,  either  without  a  con- 
test or  after  taking  it  into  court,  with  two  exceptions  the  carrier 
has  accepted  as  a  substituted  rate  the  rate  recommended  by  the 
Commission. 

Mr.  Knapp.  I  think  that  is  true. 

Senator  Clapp.  ^Vell,  with  the  power  of  the  Commission  to  chal- 
lenge anew  the  substituted  rate,  practically  the  carrier  would  have 
to,  as  a  rule,  accept  the  recommendation,  would  it  not? 

Mr.  Knapp.  Senator  Clapp,  I  will  answer  that  question  in  this 
way:  I  anticipate  that  when  a  decision  of  the  Commission  is  taken 
to  court,  imder  any  scheme  that  you  are  considering,  the  vital  question 
will  be,  was  the  Commission  right  in  its  condemnation  of  the  rate 
complained  of? 

Senator  Clapp.  Yes. 

Mr.  Knapp.  If  it  was,  the  rest  follows. 

Senator  Clapp.  Yes.  And  when  that  is  established,  either  by  ac- 
ceptance without  a  contest  in  the  court  or  by  the  court,  that  settles  the 
vital  question  that  was  at  isstie,  does  it  not? 

Mr.  Knapp.  Substantially;   yes,  sir. 

Senator  Clapp.  Yes.  And  practically,  as  a  rule,  the  carrier  would 
necessarily  and  naturally  adopt  the  rate  recommended  in  substitution  ? 

Mr.  Knapp.  That  would  not  follow. 

Senator  Clapp.  What  ? 

Mr.  Knapp.  That  would  not  follow. 

Senator  Clapp.  Well,  I  do  not  say  in  all  instances. 

Mr.  Knapp.  No. 

Senator  Clapp.  But  with  the  power  left  back  in  the  Commission  to 
again  challenge  the  substituted  rate,  which  of^course  it  would  have, 
would  it  not,  as  a  practical  result — practically  follow,  to  use  that 
expression — that  the  carrier  would  adopt  the  rate  recommended  by 
the  Commission? 

Mr.  Knapp.  Oh,  I  should  put  that  this  way 

Senator  Clapp.  Well,  you  state  it,  then. 

Mr.  Knapp.  The  carrier  can  not  afford  to  trifle  with  public  author- 
ity.    It  can  not  afford  to  do  a  trivial  and  evasive  thing.     I  must 


170  EEGULATIOX    OF   RAILWAY   RATES. 

honestly  say  that  I  do  not  belieye  any  railroad  manager  would  make, 
under  such  a  theory-  as  that,  a  nominal  change  in  a  rate  for  the  pur- 
pose of  technically  complying  with  an  order  to  cease  and  desist.  If 
that  was  done  twice  in  this  country  the  next  session  of  Congress 
would  fix  it. 

Senator  Cla?p.  Yes.' 

Mr.  Knapp.  If  you  will  pardon  me  for  making  a  further  answer. 
Senator  Ci^app.  Yes :  certainly :  go  on. 

Mr.  Knapp.  Xow.  as  a  practical  matter,  after  all  there  is  not  so 
much  difference  between  the  plans,  because  I  haye  long  been  of  the 
opinion  that  not  only  should  the  initiatiye  in  rate  making  remain 
with  the  carriers,  but  that  any  order  which  the  Commission  makes 
requiring  a  rate  to  be  changed  for  the  future  should  be  limited  in 
time  as  to  its  effect  to  a  not  yery  long  period. 
Senator  Clapp.  Yes. 

Mr.  Kxapp.  So  that,  let  us  say  after  a  year,  if  you  please,  the  ini- 
tiatiye as  to  that  rate  should  attach.  And  it  seems  to  me  that  is  a 
complete  answer  to  this  suggestion  that  a  commission  that  can  change 
one  rate  can^  change  all  rates,  and  it  is  only  a  question  when  they  are 
all  made  by  the  Goyernment. 

Senator  Clapp.  Xow.  as  between  the  order  condemning  a  rate  and 
an  order  substituting  another  rate,  in  so  far  as  it  inyolves,  by  the 
court  upon  reyiew.  the  suggestion  of  a  legislatiye  duty,  as  sug- 
gested by  the  Senator  from  Xew  Jersey,  the  question  would  be  ab- 
solutely free,  would  it  not.  from  all  embarrassment  of  that  sort,  if  it 
was  limited  to  the  order  condemning  a  rate  as  unreasonable?  Do  I 
make  that  plain  ? 

Mr.  KxAPP.  If  I  comprehend  your  question,  as  I  think  I  do,  it  is 
quite  obyious  to  me  that  such  a  plan,  of  course,  ayoids  certain 
questions  which  haye  been  yery  much  controyerted  during  this 
hearing. 

Senator  Clapp.  I  did  not  mean  to  interrupt  you. 
Senator  Cullom.  You  mean  simph'  the  declaring  of  the  rate  un- 
reasonable ? 

Senator  Clapp.  Xo;  what  I  mean  is  as  to  a  reyiew  by  the  court, 
declaring  a  rate  unreasonable.  That  would  be  free  from  any  of  these 
questions. 

Mr.  Knapp.  Oh,  I  think  so. 
Senator  Clapp.    Yes. 

]SIr.  KxAPP.  And  I,  for  one.  can  see  that  that  right  should  be 
granted.  That  is  to  say,  the  carrier  which  is  unwilling  to  accept  the 
adjudication  and  order  of  the  Commission,  and  wishes  to  reyiew  that, 
should  haye  the  right  to  reyiew  the  condemnation  of  the  rate  com- 
plained of  as  well  as  the  rate  put  in  substitution.  It  seems  to  me  that 
is  within  the  range  of  justice.  So  I  say,  gentlemen,  it  would  be  a 
waste  of  time  for  me  to  discuss  the  remaining  question.  I  will  say 
again,  as  I  haye  said,  I  am  not  able  to  see  how  you  can  apply  the 
remedy  which  a  giyen  situation  may  seem  to  require  unless  you  haye 
an  administratiye  or  legislatiye  tribunal  which  can,  acting  under  your 
authority,  substitute  arate  to  be  charged  in  the  future  in  place  of 
the  rate  which  has  been  found  unlawful.  If  you  can  find  a  way  to 
accomplish  the  purpose  and  meet  the  needs  in  that  regard^  in  some 
other  way,  I  can  only  say  that  I,  as  a  member  of  the  Commission,  shall 


BEGULATIOX    OF    EAILWAY   BATES.  l7l 

be  glad  to  be  relieved  of  the  responsibility,  which  is  a  very  great  one, 
of  saying  in  such  a  case  as  that  how  much  the  railroad  sliall  charge  in 
the  future. 

Senator  Cullom.  There  is  only  one  of  two  ways.  One  is  by  the 
Commission  and  the  other  is  by  the  court,  if  you  can  show  that  the 
court  has  the  power. 

Senator  Kean.  If  a  court  finds  a  rate  unreasonably  high  and  de- 
crees that  that  rate  shall  be  discontinued,  do  you  not  think  that  that 
decree  would  result  in  substantial  relief? 

Mr.  KxAPP.  Senator  Kean,  we  do  not  know.  In  the  first  place,  we 
do  not  know  whether  the  court  would  do  that  or  not.  There  is  no 
authority  to  indicate  that  at  all.  The  weight  of  authority  is  very 
much  to  the  proposition  that  it  will  not. 

Senator  Ci.app.  Pardon  me.  but  I  do  not  think  that  you  quite 
caught  the  Senator's  inquiry. 

Senator  Kean.  If  the  court  finds  a  rate  unreasonably  high  and 
decrees  that  that  rate  shall  be  discontinued,  do  you  not  think  that 
that  decree  would  result  in  substantial  relief  ? 

Mr.  KxAPP.  Yes;  if  it  did.  But  this  is  my  proposition.  Un- 
questionably there  are  certain  situations  in  which  a  court  may  render 
a  judgment  which  affects  a  rate,  and  may  indirectly,  under  some 
circumstances  and  to  some  extent,  practically  affect  that  rate  for  the 
future.  But  is  there  any  case  in  which  that  has  not  happened  as  an 
incident  to  some  other  purpose,  and  is  there  any  authority  for  the 
proposition  that  a  court  will  maintain  an  action,  the  object  and  pur- 
pose of  which  is  to  reduce  a  freight  rate,  while  plainly  the  object 
and  purpose  of  the  action  is  to  require  a  lower  rate  to  be  charged  for 
the  future?  Does  not  every  authority  deny  that  a  court  can  do  any- 
thing of  that  sort  ?  ,         .        *  . 

Senator  Clapp.  Did  you  not.  Judge,  have  in  mind,  in  connection 
with  the  Senator's  question,  the  idea  that  in  that  proceeding  not 
only  was  a  present  rate  being  condemned,  but  another  rate  was  sought 
to  be  substituted — a  definite  rate? 

Mr.  KxAPP.  I  understood  the  Senator's  question  to  be  this:  If  a 
court  should  entertain  an  action,  the  object  and  purpose  of  which  is 
to  have  it  declared  that  a  rate  in  force  is  unreasonably  high,  and  to 
have  an  injunction  restraining  the  carrier  from  continuing  that 
rate 

Senator  Keax.   Yes. 

Mr.  KxAPP  (continuing).  "NMiether  that  would  not  operate  to 
affect  the  rate  for  the  future?  Of  course  it  would,  if  the  court  did 
it.  If  the  court  entertained  the  action,  and  did  enjoin  the  further 
imposition  of  the  rate.  why.  of  course,  that  would  have  the  effect  of 
bringing  about  some  change  in  that  rate  for  the  future.  But  you 
are  assuming  two  propositions,  neither  of  which  finds  any  judicial 
support  up  to  this  time. 

Now,  if  I  may  add  one  word  about  the  Elkins  bill.  A  more 
effective  and  complete  measure  for  its  purpose  4>as  not  come  within 
my  observation.  It  is  invaluable.  Now,  gentlemen,  just  think  of  it; 
just  see  what  the  defect  was  in  the  original  law.  judge  Grosscup 
held  very  early  after  it  went  into  operation  that  you  could  not  con- 
vict a  carrier  for  paying  a  rebate  unless  you  proved  that,  for  like  and 
contemporaneous  service,  it  charged  somebody  else  more.  That  is, 
you  had  to  prove  an  actual  discrimination.     As  a  practical  matter, 


172  REGULATION    OF    RAILWAY   RATES. 

you  never  could  do  it.  For  eight  years,  gentlemen,  we  were  here  ask- 
ing this  Congress  to  just  make  enough  change  in  that  section  so  that 
the  tariff  rate  should  be  the  legal  rate,  and  any  departure  from  it  an 
offense.  And  when  we  got  that  in  the  Elkins  bill  the  thing  stopped 
over  night.  That  is  to  say,  when  your  law  is  effective,  when  anybody 
that  is  violating  it  knows  that  he  can  be  reached  and  punished,  why, 
he  is  going  to  stop.  You  do  not  appreciate  sometimes,  I  think,  the 
deterrent  force  of  law.  That  is  a  great  thing  to  be  said  about  this 
act  to  regulate  commerce.  Suppose  it  is  inadequate.  Granted  that 
the  Commission  has  not  been  capable  of  administering  so  great  a 
trust.  Can  you  overestimate  what  the  effect  has  been  on  the  railway 
operations  and  practices  of  this  country,  that  there  was  such  a  law, 
and  that  there  was  a  Commission  with  the  fullest  powers  of  investi- 
gation and  exj)osure  ? 

Well,  gentlemen,  I  have  talked  long  enough  to  prove  the  charge 
that  I  am  unfit  for  my  j^lace,  and  I  will  now  answer  any  questions 
that  you  want  to  ask. 

Senator  Clapp.  I  would  like  to  ask  you  about  one  point,  and  that 
is  this  long  and  short  haul.  I  understand  that  you  favored  in  some 
form  an  exception  to  the  prohibition  contained  in  the  fourth  section. 

Mr.  Knapp.  Let  me  add  another  reason.  In  the  present  state  of 
the  law  there  is  no  restraint  upon  the  spread  of  that  form  of  dis- 
crimination into  the  territory  where  it  now  seldom  happens.  But  I 
see  some  indications  that  the  discriminations  of  that  kind  are  re- 
appearing in  that  territory,  and  I  think  Senator  Dolliver  will  find 
that  not  very  long  ago,  when  a  sort  of  a  rate  war  broke  out  between 
the  lines  leading  to  the  Atlantic  and  the  lines  leading  to  the  Gulf, 
that  corn  and  perhaps  some  other  jiroclucts  were  carried  from  Omaha 
to  tidewatei*  for  considerably  less  than  the  rates  from  Iowa.  So 
there  was  a  violation  of  the  long  and  short  haul  clause  up  in  that 
territory. 

vSenator  Dolliver.  Yes;  we  took  a  good  deal  of  corn  down  to 
Omaha  to  start  it. 

Mr.  Knapp.  Yes.  I  will  make  this  suggestion,  that  it  may  turn 
out  that  if  we  can  put  some  sort  of  restraint  on  that  form  of  dis- 
crimination, at  least  enough  to  prevent  its  spread,  that  would  oper- 
ate to  prevent  some  of  these  rate  wars,  and  to  prevent  the  demoraliza- 
tion that  alwaj^s  happens.  In  this  case  they  would  not  have  been 
making  a  13-cent  rate  from  Omaha  to  Baltimore  if  they  had  had 
to  apply  that  as  the  maximum  rate  in  all  this  territory. 

Senator  Clapp.  "What  I  wanted  to  know  is  whether  there  should 
be  some  exemption  to  the  prohibition? 

Mr.  Knapp.  Undoubtedly. 

Senator  Clapp.  Now,  undoubtedly  the  law  provides  at  j^resent 
that  the  exemption  is  to  a  dissimilar  condition.  The  court,  in  the 
Midland  Case,  emphasized  two  or  three  times  that  competition  was 
not  the  only  consideration. 

Mr.  Knapp.  Yes,  sir. 

Senator  Clapp.  Now,  what  kind  of  a  limitation  would  you  suggest 
to  this  exemption;  or,  in  other  words,  to  put  it  more  grammatically, 
probably,  how  would  you  frame  this  exemption?  Do  I  make  that 
clear? 

Mr.  Knapp.  Yes.    This  is  one  way ;  that  the  competition  of  carriers 


EEGITLATION    OF    RAILWAY   BATES.  173 

not  subject  to  the  act  may  justify  the  higher  charge  for  the  shorter 
haul  ? 

Senator  Clapp.  Yes. 

Mr.  Knapp.  But  other  forms  of  competition  shall  not.  But,  of 
course,  retaining  and  perhaps  amplifying  the  proviso  clause  now  in 
the  section,  so  that  even  in  cases  of  competition  between  carriers 
subject  to  the  act  the  Commission  Avould  have  power. 

Senator  Clapp.  Then,  you  would  limit  the  legal  exemption,  and 
leave  the  broader  exemption  to  the  Commission? 

Mr.  Knapp.  Yes,  sir. 

Senator  Clapp.  I  wanted  to  get  vour  idea  in  reference  to  it:  that  is 
all.  " 

Senator  Kean.  Do  we  understand  that  the  other  commissioners 
will  be  heard  on  Monday  ? 

Senator  Cullom.  It  is  understood  that  the  commissioners,  those 
who  have  not  been  heard,  may  be  heard  on  Monday  morning,  at  11 
o'clock,  if  they  so  desire. 


Monday,  3Imj  32, 1905. 

STATEMENT  OF  HON.  JOSEPH  W.  FIFER,  INTERSTATE  COMMERCE 

COMMISSIONER. 

Senator  Cullom  (in  the  chair).  Judge  Fifer,  we  shall  be  glad  to 
hear  you  now. 

Mr.  Fifer.  Mr.  Chairman  and  gentlemen  of  the  committee,  I  ap- 
preciate the  fact  that  you  have  been  here  for  a  long  time  patiently 
and  thoroughly  investigating  the  matters  which  you  have  under  con- 
sideration, and  I  shall  therefore  detain  you  for  but  a  short  time. 

I  regret  exceedingly  that  our  railroad  friends  deemed  it  necessary 
for  the  proper  presentation  of  their  case  to  criticise  the  Commission 
as  harshly  as  they  have  done.  As  I  read  from  day  to  day  these 
criticisms  in  the  newspapers,  I  felt  that  they  were  making  a  mistake, 
and  I  entertain  that  opinion  still.  Many  bitter  things  might  be 
said  in  reply,  I  expect;  things  that  will  suggest  themselves  to  the 
dullest  mind,  but  I  decline  to  enter  that  field  and  will  leave  the 
subject  with  this  single  further  remark:  If  members  of  the  Com- 
mission have  manifested  some  feeling,  apparently,  in  regard  to  this 
subject,  we  beg  the  committee  to  remember  the  provocation.  Our 
friends  may  possibly  have  learned  by  this  time  that  hunting  the  tiger 
is  fine  sport,  but  the  fun  all  ceases  when  the  tiger  hunts  them. 

I  have  thought  that  I  might  aid  the  committee  to  a  proper  solu- 
tion of  the  questions  it  has  under  consideration  by  a  brief  reference 
to  the  regulating  statute  as  it  now  stands.  Turning  to  that  law  you 
will  find  the  first  five  sections  of  the  statute  impose  most  of  the  duties 
and  obligations  upon  the  railroads.  They  are  the  most  important 
sections  in  the  statute.     Wliat  are  they  ?  ^ 

First.  That  all  rates  must  be  reasonable  and  just,  and  that  rates 
that  are  not  reasonable  and  just  are  declared  unlawful. 

'Wliat  next?  The  second  section  provides  that  rebates  and  draw- 
backs shall  not  be  paid.  That  is  called  by  the  Commission  the  "  per- 
sonal discrimination  section." 


174  EEGUL-^TION    OF    RAILWAY   RATES. 

The  third  section  provides  against  discrimination  between  locali- 
ties. 

The  fourth  is  the  long  and  short  haul  provision. 

And  fifth,  pooling. 

If  3'ou  ■\^  ill  examine  the  statute  you  will  find  that  nearly  all  the 
other  provisions,  for  the  most  part  at  least,  are  intended  to  give 
vitality  and  force  to  these  five  sections.  How  do  they  do  it?  I  need 
not  go  over  all  the  i^owers  that  are  delegated. 

First,  the  Commission  was  provided  for  and  certain  powers  given 
to  the  Commission,  the  poAver  to  issue  subpoenas  and  compel  attend- 
ance of  witnesses,  the  production  of  books  and  papers,  and  to  admin- 
ister oaths.  The  railroads  were  required  to  make  reports,  among 
other  provisions.  But  all  had  reference  to  giving  vitality,  force,  and 
effect  to  the  first  five  sections  of  the  act.  I  shall  endeavor  to  show, 
later  on,  that  these  powers  are  not  sufficient.  Around  those  five  sec- 
tions rages  this  contest,  and  I  feel  that  I  am  not  saying  too  much  when 
T  sa}'  that  that  citadel  has  been  taken  and  lost,  perhaps,  in  the  minds 
of  the  members  of  this  committee,  several  times  since  these  discus- 
sions were  begun. 

What  ones  of  those  five  sections  are  in  dis]3ute  here?  Not  the 
fifth  section,  with  reference  to  pooling.  We  can  cut  that  right  out 
and  set  it  aside  as  having  nothing  to  do,  as  I  understand,  with  the 
discussion.  We  can  dispose  of  that.  The  shippers  are  unwilling  to 
grant  the  power  of  pooling  on  the  one  hand,  and,  on  the  other,  many 
railroads  do  not  want  pooling.  It  has  been  said  here  and  contended 
by  those  who  are  pressing  for  an  amendment  of  this  law  that  the  rail- 
roads now  do  not  desire  pooling,  for  the  reason  that  they  have  com- 
bined. 

Then,  the  pooling  section  being  out  of  consideration,  what  is  left? 
The  second  section,  which  provides  that  railroads  shall  not  pay 
rebates  and  drawbacks.  Is  there  any  dispute  in  regard  to  that  sec- 
tion? Not  a  particle.  I  firmly  believe  that  there  is  not  a  railroad 
in  the  United  States,  or  any  of  its  officers,  that  would  not  stop  rebates 
and  draAvbacks  if  it  had  the  power  to  do  so.  The  railroads  are  the 
losers  when  drawbacks  are  paid,  and  if  they  could  stop  them  they 
would  do  so  and  preserve  their  business. 

Before  I  pass  to  the  other  sections  I  want  to  make  this  observation : 
Our  good  friend  Mr.  Hines  said  that  the  second  section  was  the  most 
important  provision  of  the  whole  act,  and  that  the  principal  object 
that  Congress  had  in  enacting  the  law  was  to  prevent  rebates  and 
drawbacks.  In  that  statement  I  do  not  agree.  Let  us  see.  What 
class  of  people  are  affected  by  rebates  and  drawbacks?  "Wlio  are 
injured  and  who  are  benefited? 

In  saying  wdiat  I  shall  on  that  subject,  I  want  it  understood  that  I 
do  not  in  the  slightest  degree  minimize  the  evil  results  flowing  from 
the  payment  of  rebates  and  drawbacks.  They  are  the  Pandora's 
box  from  which  flow  many  evils,  and,  in  the  language  of  the  Presi- 
dent, they  should  be  stopped.  Let  us  examine,  now.  Who  are 
affected  by  rebates  and  drawbacks?  The  railroads,  of  course,  because 
they  pay  the  money.  AMio  are  benefited  ?  Unfortunately,  only  a  few 
large  shippers.  There  are  remote  consequences  that  follow  also.  The 
payment  of  rebates  to  the  large  shippers  enables  them  to  break  down 
and  run  out  of  the  business  their  competitors,  thereby  lessening  the 
number  of  persons  to  whom  the  original  producer  can  sell  his  goods. 


REGULATION    OF    RAILWAY 'eATES.  175 

Those  rebates  do  not  affect  the  producer,  snch  as  the  grain  grower 
out  on  the  broad  prairies  of  Illinois  and  Iowa.  Many  of  those  people 
never  pay  a  railroad  rate.  They  do  not  deal  with  railroad  men. 
The}^  haul  their  grain  to  the  markets  in  wagons,  and  there  it  is  sold. 
Those  men  are  more  directly  interested  in  the  size  of  the  rate  than 
they  are  in  regard  to  rebates.  But  it  is  utterly  immaterial  to  a 
farmer  whether  there  are  two  or  a  dozen  elevator  men  in  the  town 
where  he  sells  his  grain,  with  this  qualification :  That  there  must  be 
competition,  for  he  is  affected  in  that  way.  There  must  be  competi- 
tion so  that  the  purchase  of  the  grain  by  the  elevator  man  will  not 
become  a  monopoly. 

You  will  hear  the  large  shippers,  the  middlemen,  remark  fre- 
quenth'  that  they  do  not  care  anything  about  the  amount  of  the  rate, 
and  neither  do  they,  provided  alwaj^s  that  the  rate  is  kept  down  so 
that  the  traffic  will  move.  That  is  all  tliey  care  for,  and  they  make 
just  as  much  money  whether  the  rate  is  $1  or  whetlier  it  is  80  cents, 
provided  the  traffic  will  move  as  freely  under  one  rate  as  it  will  under 
the  other.  So  that  they  are  not  interested  in  the  rate,  with  that  one 
solitary  qualification. 

But  there  are  a  class  of  people  who  are  interested  in  that  rate — the 
consumer  and  the  original  producer.  Mr.  Hines  said  that  the  con- 
sumer did  not  feel  the  high  rate  so  much.  That  is  true  to  a  very 
large  extent.  You  take  a  man  on  the  plains  of  the  West — a  cattle 
raiser,  who  has  a  thousand  head  of  cattle — he  markets  them  in  Chi- 
cago or  New  York ;  the  rate  may  be  ever  so  high.  Perhaps  a  million 
human  beings  eat  that  beef,  and  the  excessive  rate  is  divided  up  to 
that  extent.  A  load  under  which  a  single  man  will  stagger  two 
will  carry  with  ease  and  ten  Avill  feel  not  at  all. 

But  how  is  it  with  the  producer  who  has  the  thousand  head  of  cat- 
tle ?  All  he  has  in  the  world  is,  perhaps,  iuA^ested  in  his  herd,  and  it 
is  a  matter  of  the  most  vital  importance  whether  he  pays  50  cents  a 
hundred  or  whether  it  is  5  cents  higher.  He  is  the  man  that  feels 
the  excessive  rate.  So  I  say  that  ]Mr.  Hines  is  mistaken  when  he  says 
that  that  is  the  most  important  feature  of  the  statute.  That  it  is 
important  I  do  not  deny,  and  I  repeat  that  I  would  not  in  the  least 
minimize  the  evil  consequences  flowing  from  the  payment  of  rebates 
and  drawbacks. 

Let  us  examine  the  statute  again.  The  first  thing,  the  thing  that 
stands  at  the  head,  affects  the  rate — "  all  rates  shall  be  reasonable." 
That  is  at  the  top  of  the  ladder,  and  the  rebate  is  included  in  the  sec- 
ond section.  Well,  that  might  not  be  of  very  much  importance,  but 
I  must  pass  on  from  this  with  this  further  observation : 

Our  friend  Hines  says  that  this  section,  the  second  section,  has  not 
been  enforced.  While  he  does  not  say  so  in  terms,  inferentially  he 
does  say  that  the  Commission  has  been  derelict  in  its  duty.  Think 
for  a  moment.  Congress  enacted  a  statute  that  created  offenses 
which  before  were  not  offenses.  There  are  offenses  denominated  by 
the  law  as  malum  in  se  and  malum  prohibitum.^  Before  Congress  en- 
acted this  statute  it  was  no  violation  of  law  to  pay  a  rebate.  Yester- 
day' it  was  no  offense;  to-day  it  is  made  a  penal  offense  punishable 
with  a  term  in  the  penitentiary.  I  do  not  care  what  moralists  may 
say  in  regard  to  those  different  kinds  of  offenses.  They  may  dilate 
forever  upon  the  enormity  of  the  crime  of  leaving  rebates  and  draw- 
backs, but  the  generality  of  mankind  never  have  regarded  and  never 


176  REGULATION    OF   RAILWAY   RATES. 

will  regard  it  in  the  saiiie  light  as  they  do  crimes  malum  in  se,  such 
as  murder  and  theft,  acts  which  have  been  made  crimes  by  the  com- 
mon consent  of  mankind  through  all  time.  I  say  it  is  diflPerent.  We 
have  met  with  that  difficulty. 

You  take  these  railroad  men.  The}^  might  pay  rebates,  hundreds 
of  them,  and  violate  the  law  every  day  in  the  year.  You  would 
know  it  and  their  neighbors  might  all  know  it.  But  they  do  not  lose 
caste.  They  would  be  invited  to  your  homes  and  introduced  to  your 
families  just  the  same  as  they  were  before.  So  that  we  have  that 
difficulty,  and  any  lawyer  who  has  ever  prosecuted  crimes  can  cor- 
roborate what  I  sa}'. 

It  was  told  here  b}'  Mr.  Clements,  the  Nestor  of  the  Commission, 
and  perhaps  who  is  as  well  acquainted  with  its  inside  history,  its 
record  history,  as  any  member — he  told  you  about  these  investiga- 
tions where  the  evidence  of  the  rebates  was  kept  separate  from  the 
general  records;  it  was  a  private  matter,  a  private  transaction- - 
''  on  the  side,"  as  the  boys  sometimes  say ;  and  when  the  necessity 
for  the  use  of  the  account  of  the  private  transaction  had  gone  by  the 
papers  were  all  destroved  and  no  evidence  left.  AVliat  are  you  going 
to  do  when  you  run  up  against  a  proposition  of  that  kind  ? 

Mark  you,  I  think  it  was  not  until  1897  or  1898  that  the  Commission 
could  call  upon  a  railroad  official  to  testify  before  the  Commission. 
There  was  no  exemption,  and  you  could  not  ask  him  to  incriminate 
himself ;  he  was  entitled  to  the  protection  of  the  law. 

These  things  have  been  gone  into,  so  that,  knowing  these  things  as 
ISIr.  Hines  did,  and  knowing,  as  he  evidently  did,  the  efforts  that  were 
put  forth  by  the  Commission  to  stop  rebates,  it  was  certainly  very 
unkind  in  him  to  put  forth  the  insinuations  that  he  did. 

AVhy  harp  upon  one  string  all  the  time?  ^YhJ  the  second  section? 
It  is  simply  because,  as  I  have  stated  a  moment  ago,  there  is  not  a 
railroad  man  in  the  United  States  who  would  not  stop  paying  rebates 
if  he  could.  I  am  speaking  now  dispassionately  about  these  things. 
I  was  a  railroad  lawyer  for  many  years,  attorney  for  one  of  the  prin- 
cipal railroads  in  my  State,  and  I  think  I  can  look  at  this  question 
both  from  the  outside  and  the  in.    Of  course  they  want  to  stop  rebates. 

Senator  Cullom.  ~\Yh\  don't  they  ? 

]Mr.  FiFER.  I  will  tell  you  why  the}^  don't.  The  trouble  is  that 
these  traffic  men  know  each  other,  not  wf41  enough,  but  too  well. 
I  do  not  want  to  disparage  them  now,  but  every  mother's  son  of  them 
is  afraid,  and  refuses  to  trust  the  other  fellow.  That  is  the  secret. 
."\Miere  one  road  seems  to  be  getting  more  than  its  share  of  the  traffic, 
they  are  so  suspicious  that  they  think  the  rates  are  being  cut,  and  the 
lirst  thing  you  know  everybody  is  paying  rebates  and  the  tariffs  are 
ffoing  to  the  demnition  bowwows. 

Senator  Cullom.  AAliat  are  you  going  to  do  about  it? 

Mr.  FiFER.  "Well,  I  will  say  this:  Do  not  think,  gentlemen,  that 
you  can  reform  the  world  by  making  law  tii rough  the  a^^es  and  noes 
of  a  legislative  assembly.  If  you  could,  this  would  be  a  splendid 
world  for  honest  people  to  live  in.  You  never  can  j^revent  the 
commission  of  crime  and  3'ou  never  can  reform  the  world  by  the 
enactment  of  laws.  The  preacher  and  the  school-teacher  must  do 
their  share,  while  the  lawmaker  and  the  law  prosecutor  are  holding 
crime  in  check  as  much  as  they  may. 

So  far  as  the  second  section  is  concerned,  it  is  universally  admitted 


REGULATION    OF    RAILWAY    RATES.  177 

that  never  in  the  history  of  this  country  have  rates  been  so  well 
maintained  as  they  are  at  this  blessed  moment,  and  have  been  for  the 
past  two  or  three  years. 

Senator  Cijllom.  By  that  do  you  mean  that  there  has  never  been 
a  time  when  the  law  was  so  well  enforced? 

Mr.  FiFER.  Well,  m}'-  colleague.  Judge  Clements,  told  you  about 
what  was  being  done;  that  is  a  Avide-open  door,  and  it  is  no  use  for 
me  ao-ain  to  travel  over  the  same  ground.  That  section  has  tended 
to  hold  the  railroads  in  restraint.  I  believe  that  the  best  results 
do  not  always  come  by  simply  catching  people  who  have  committed 
crimes  and  sending  them  to  the  penitentiary.  I  believe  the  restrain- 
ing influence  that  hangs  over  the  heads  of  people  follows  from  the 
fear  that  if  they  do  wrong  the}"  are  likely  to  get  into  trouble.  I 
believe  that  that  is  the  most  beneficial  part  of  any  criminal  statute. 
Of  course  there  must  be  an  attempt  to  enforce  it — no  doubt  about 
that — because  if  it  is  utterly  neglected  nobody  will  have  any  respect 
for  it. 

So  that  I  disagree  with  Mr.  Hines  when  he  says  that  the  most 
important  purj)ose  that  Congress  had  in  view  in  enacting  the  law  was 
found  in  the  second  section.  That  it  is  important,  I  admit:  that  it 
is  the  most  important,  I  deny. 

We  all  agree  that  if  the  second  section  is  not, strong  enough  to 
prevent  rebates  and  drawbacks,  make  it  stronger.  The  railroads  say 
so,  the  Commission  says  so.  the  great  shipping  public  says  so. 

Senator  Foraker.  If  I  do  not  interrupt  you 

Mr.  FiFER.  Not  at  all ;   ask  me  any  question  you  desire. 

Senator  Foraker.  I  understood  von  to  sav  a  moment  ago  that 
there  never  was  a  time  when  rates  were  so  well  enforced  as  they 
have  been  during  the  last  two  or  three  years.  That  followed  im- 
mediately after  your  discussion  of  rebates.  By  that  do  you  mean 
to  have  us  understand  that  rebates  are  not  now  so  much  granted  as 
heretofore  ? 

Mr.  Fifer.  Undoubtedly  that  is  true.  Senator.  While  I  am  on 
that  point  I  will  further  st^te  that  we  have  taken  occasion,  when 
traffic  men  have  been  before  us — although  it  was  irrelevant  to  the 
subject  under  inquiry — to  ask  questions,  under  the  general  joowers 
delegated  to  the  Commission,  to  inform  ourselves  whether  they  kncAv 
of  any  rebates  being  paid  and  whether  rates  were  being  maintained. 
Further,  Senator,  I  believe  that  rates  are  now  being  maintained. 
What  brought  about  that  happy  condition  is  due  to  several  causes. 
I  think,  as  was  suggested  by  the  Senator  from  Louisiana  [Mr. 
Foster]  yesterday — or  perhaps  it  was  the  Senator  from  Nevada 
[Mr.  Newlands] — that  these  are  flush  times,  that  railroads  have  an 
abundance  of  traffic,  and  that  the  inducement  to  cut  rates  does  not  now 
exist.  I  think  there  is  a  large  share  of  truth  in  that.  I  think  it  is 
due  somewhat,  and  very  largely  possibly,  to  the  Elkins  law,  because 
that  tied  up  some  fourteen  roads  from  departing  from  their  rates 
and  paying  rebates.  I  think  there  is  a  general  understanding  among 
railroads  that  they  will  maintain  rates.  It  is  all  these  things  com- 
bined. Of  course  I  have  no  information  in  regard  to  that  matter 
except  as  I  can  gather  it  from  rate  men  and  shippers.  But  I  think  if 
everj^  traffic  man  in  the  United  States  were  called  before  this  com- 

741  A— 05 12 


178  EEGULATION    OF    RAILWAY    RATES. 

mittee  and  made  to  testify  he  would  say  here,  as  I  have  said,  that 
there  has  scarcely  ever  been  a  time,  certainly  not  in  recent  years,  when 
rates  were  so  well  maintained  as  now,  and  that  there  are  but  few 
rebates  paid. 

Senator  Foraker.  If  we  should  have  a  recurrence  to  the  practice 
of  giving  rebates,  what,  in  your  judgment,  is  the  best  remedy  for 

that? 

Mr.  FiFER.  I  do  not  know  that  I  can  make  any  suggestion,  Senator ; 
T  do  not  knov>'  how  the  second  section  could  be  made  any  stronger.  _ 

Senator  Foraker.  I  am  referring  now  to  the  provision,  found  in 
the  Elkins  law,  granting  a  remedy  by  injunction  and  requiring  a 
summary  proceeding  in  court,  if  it  has  jurisdiction,  to  stop  rebates. 
^¥[\s^t  would  you  suggest,  by  way  of  amending  the  law,  if  the  prac- 
tice of  giving  rebates  should  again  be  resorted  to? 

Mr.  FiFER.  I  do  not  believe,  Senator,  that  I  could  make  any  sug- 
gestion. I  would  not  say  that  the  law  could  not,  perhaps,  be  made 
more  rigid  and  the  way  of  the  transgressor  made  a  little  more  diffi- 
cult. But  yet  I  do  not  see  now  how  I  could  make  any  suggestions 
in  regard  to  that,  except  to  provide  for  expert  examinations  of  the 
books. 

That  disposes  of  the  jfif th  and  second  sections ;  that  is,  the  pooling 
and  the  rebate  sections. 

You  will  remember  that  at  the  close  of  the  war,  when  the  now  his- 
torical peace  conference  occurred  between  President  Lincoln  and  Alex- 
ander H.  Stephens,  Mr.  Stephens  is  said  to  have  asked  Mr.  Lincoln, 
"  What  terms  are  you  willing  to  grant?  "  i\jid  it  is  rejDorted  that  Mr. 
Lincoln  replied,  ""  If  the  South  will  consent  to  the  abolition  of  slav- 
ery, they  can  write  the  other  conditions."  So,  if  the  right  of  the 
railroads  is  reserved  to  them  to  make  and  control  their  own  rates, 
they  will  consent,  I  take  it,  to  about  all  the  other  conditions. 

But  I  think  you  will  find,  gentlemen,  that  they  will  never  consent 
to  surrender  the  smallest  fraction  of  that  power.  They  will  hold  on 
to  that  like  a  lost  sinner  to  the  Rock  of  Ages.  They  will  never  let 
go.  And  I  expect,  if  I  were  a  railroad  man,  I  would  take  the  same 
view.  Not  because  these  railroad  men  are  any  worse  than  anybody 
else.  If  you  take  all  the  people  to-day  in  the  United  States  who  are 
complaining  in  regard  to  these  matters,  and  let  them  change  places 
with  the  railroad  men,  you  would  hear  just  as  much  complaint, 
perhaps.  The  individuals  might  change  places,  but  the  racket  would 
keep  on  just  the  same. 

Looking  at  it  fairly,  I  know,  and  every  reasonable  man  knows, 
that  some  of  this  talk  about  the  injustice  and  the  inequality  of  these 
tariffs  and  the  conduct  of  railroads  is  unjustifiable  and  unreasonable. 
Much  of  it,  too,  rests  on  a  good  foundation. 

There  are  two  of  those  sections  disposed  of.    "W^iat  are  the  others? 

The  first,  which  says  that  rates  shall  not  be  unreasonable. 

The  third,  that  you  shall  not  discriminate  between  localities. 

And  fourth,  the  long  and  short  haul  clause  of  the  law. 

Every  one  of  those  sections,  if  violated,  requires  what?  It  requires 
a  change  of  rate.  If  any  railroad  man  can  think  of  any  other  way 
to  correct  a  violation  of  either  one  of  those  sections  (the  first,  third,  or 
fourth),  let  him  speak  up  now,  or  forever  hold  his  peace.  He  can 
not  do  it.  If  the  rate  is  too  high,  it  must  be  cut  down.  If  there  is  a 
discrimination  between  localities,  one  rate  must  be  cut  down  a  little 


EEGULATIOK"    OF    EAILWAY   EATES.  l79 

or  the  other  must  be  raised  a  little,  and  a  proper  relation  of  rates 
must  be  brought  about. 

As  to  the  long  and  short  haul  clause,  you  can  not  correct  the  ine- 
qualities unless  there  is  a  change  of  rates.  If  you  will  examine  into 
the  question,  you  will  find  that  a  great  deal  of  injustice  is  done  in 
regard  to  inequalities  between  localities,  excessive  rates,  and  in  the 
long  and  short  haul  clause. 

Before  I  leave  that  I  want  to  make  this  observation,  since  I  am  on 
the  question  no^^'  of  rate  making:  The  railroads  have  the  right,  in 
the  first  instance,  to  make  their  own  rates,  free  and  untrammeled,  so 
far  as  any  governmental  influence  or  authority  is  concerned. 

That  leads  to  the  inquiry,  Is  there  no  limitation  upon  the  power 
of  railroads,  then,  to  make  rates  in  this  country?  Can  they  charge 
just  what  they  please?     Certainly  not.     There  are  three  limitations: 

First,  competition.  Eailroads,  by  combining,  can  do  away  with 
competition,  except  water  competition.  But  there  is  competition  in 
this  countr}^,  both  rail  and  water,  and  the  majority  of  railroad  rates 
in  this  country  are  made  by  competition,  either  of  markets  or  by 
direct  competition.  That  is  one  limitation  upon  their  authority. 
Wliat  are  the  other  two  ? 

Another  one  is  the  commercial  conditions.  You  will  hear  traffic 
men  whirl  that  off  their  tongues  as  gliblj'  as  j^ou  please.  What 
does  it  mean?  We  have  heard  this  question  over  and  over  again, 
until  it  has  become  as  familiar  as  the  primer.  ^Vliat  are  com- 
mercial conditions?  Suppose  I  own  a  thousand  acres  of  timber 
down  Scfuth  that  will  make  lumber.  It  will  cost  me  $15  per  thousand 
to  manufacture  that  timber  into  lumber;  the  rate  is  $5  a  thousand; 
the  lumber  in  the  market  is  worth  $20.  If  I  can  not  get  a  reduced 
rate  I  will  allow  that  timber  to  rot  in  the  forest,  because  it  would  be 
a  silly  farce  for  me  to  work  for  nothing  and  manufacture  that  timber 
into  lumber.  I  go  to  a  railroad  man,  explain  to  him  the  circum- 
stances, and  I  say,  "  I  can  not  manufacture  this  timber  into  lumber 
unless  you  reduce  your  rate;  if  you  will  reduce  that  I  will  make 
business  for  you  and  I  will  make  something  out  of  it  for  myself." 
In  order  to  move  that  lumber  the  railroad  man  must  reduce  his  rate, 
and  generally  does,  and  makes  something  out  of  the  transaction. 
That  is  an  illustration  of  commercial  conditions.  That  is  two 
limitations. 

The  other  limitation  upon  the  power  of  railroads  to  make  rates 
is  what  the  traffic  will  bear. 

Some  traffic  men  will  tell  you  that  that  is  true  and  others  will  hedge 
a  little  on  that.  They  do  not  like  to  come  out  flat-footed  and  admit 
that  they  charge  as  much  as  the  traffic  will  bear.  But  they  do,  all 
the  same.  As  Mr.  Hines  says,  this  is  not  a  religious  or  moral  ques- 
tion. It  is  a  business  question — that  is,  when  these  gentlemen  come 
to  make  their  rates  they  do  not  go  into  a  closet  and  fall  on  their  knees 
and  ask  divine  guidance.  Senator  Ingalls,  j^u  know,  once  said  about 
our  pilgrim  forefathers : 

First  they  fell  upon  their  knees, 
And  then  upon  the  aborigines. 

Now,  Senator,  consider  our  country  out  on  those  great  prairies, 
those  great  oceans  of  fertility  and  beauty.  Do  you  suppose  that  those 
railroad  men  ride   over   those  prairies   and   take   an   inventory   of 


te 


18U  EEGULATION    OF    RAILWAY    EATES. 

those  crops  and  say,  *'  I  dearty  love  these  people  and  I  intend  to  do 
by  them  as  I  would  that  others  should  do  unto  us  ? ''  Do  they  act 
upon  that  principle?  I  do  not  Avish  to  be  understood  as  saying  that 
there  is  no  commercial  honesty  in  the  world,  I  believe  the  world  is 
growing  better,  and  I  think  there  is  more  commercial  honesty  now 
than  ever  before.  I  am  an  optimist,  not  a  pessimist.  But  they  do 
not.  AAhen  the}'  go  to  make  rates,  apply  the  (iolden  liule;  they 
apply  David  Harum's  golden  rule:  ''Do  the  other  fellow  before  he 
can  have  time  to  do  you." 

Railroad  men  are  just  as  good  as  others  in  regard  to  that;  just  as 
good  as  others.  But  business  is  conducted  on  that  priuciple.  Not 
that  the  commercial  world  is  generally  dishonest  or  in  particidar  is 
dishonest.  But  every  man  is  trying  to  get  the  best  end  or  the  bargain 
if  he  can,  and  if  these  railroad  people  can  get  the  best  end  of  the  bar- 
gain they  will  do  it. 

Now,  what  next?  I  know  that  in  reply  to  all  that  it  is  said — and 
the  questions  that  have  been  asked  by  members  of  this  committee  in- 
dicate that — that  the  factory,  the  farm,  and  the  railroad  are  all  in 
partnership ;  that  they  lean  each  against  the  other  and  support  each 
other ;  that  their  interests  lie  along  the  same  channel.  Gentlemen,  . 
that  is  true;  up  to  a  certain  jioint  it  is  entirely  true.  The  railroad 
and  the  factory  will  go  hand  in  hand  up  to  a  certain  point,  and  that 
is  the  point  where  the  factory  can  live,  thrive,  and  flourish,  and  fur- 
nish at  that  point  as  much  traffic  for  the  railroad  as  it  could  under 
any  other  condition.  The  raih-oad  is  not  going  to  strangle  the  fac- 
tory. It  will  foster  that  industry  as  tenderW  as  a  mother  will  her 
child;  not  for  the  same  purpose — of  love  and  affection — but  for  cold 
dollars,  just  for  cold  dollars,  and  that  is  incentive  enough.  ^Alien 
you  reach  the  point  where  the  factory  can  live,  flourish,  and  furnish 
business  for  the  railroad,  the  common  interest  of  the  railroads  in  the 
factory  ceases.  They  will  foster  that  industr}"  not  for  a  da}",  not  for 
a  year,  but  for  all  time,  so  far  as  speaking  from  the  business  point  of 
view  is  concerned. 

Time  was  when  wild-cat  railroading  was  going  on  in  the  country. 
Then  they  would  dart  down  on  a  small  railroad  like  a  hawk  on  a 
spring  chicken  and  get  away  with  as  many  feathers  as  the}"  could, 
and  they  did  not,  undoubtedly,  care  whether  the  industry  flourished 
or  whether  it  failed.  But  that  has  long  since  gone  by,  and  railroad- 
ing is  settling  down  rapidly  now  to  legitimate  business,  and  the  rail- 
roads want  to  foster  these  industries.  It  is  to  their  interest  to  do  so, 
and  that  is  why  they  want  to. 

Let  me  pursue  this  a  little  further.  There  is  frequently  a  wide 
margin  between  the  rate  that  will  allow  a  farmer,  a  coal  miner,  oi"  a 

ft  ... 

factory  man  to  live — a  wide  margin  between  that  amount  and  the 
amount  to  which  he  is  justly  entitled.  If  the  farmer  makes  5  per- 
cent on  his  investment  he  will  not  leave  his  farniv  and  he  may  be 
entitled  to  10  per  cent.  The  coal  miner  may,  if  he  only  makes  5  per 
cent,  stick  to  his  coal  mine,  and  he  may  be  entitled  to  10;  likewi';e 
with  the  factory.  When  it  comes  to  that  point  the  railroads  hold  the 
edge  on  the  factory. 

Senator  Dolliver.  What  do  you  mean  by  that  ? 

Mr.  FiFER.  I  mean  they  have  them  in  their  jDOwer.  The  Senator 
never  played  cards,  I  take  it.  Excuse  me.  I  did  not  recognize  the 
fact,  Senator,  that  perhaps  you  did  not  understand  those  terms. 


REGULATION    OF    RAILWAY    RATES.  181 

The  railroad  has  the  power.  Take  it  to  yourselves,  g-entlemen. 
Will  those  engaged  in  any  ordinary  business  exercise  it  for  their  own 
benefit,  or  will  they  divide  the  extra  profit?  I  am  not  going  to 
point  out.  or  attempt  to  point  out,  to  any  great  extent,  what  the  com- 
mittee ought  to  do  or  what  it  ought  to  recommend.  It  is  easy  to  make 
complaints,  it  is  easy  to  find  fault.  l)U.t  it  is  the  business  of  statesmen 
to  apply  the  remedy. 

Senator  Cullom.  You  are  one  of  the  Commissioners  undertaking 
to  execute  the  law  that  exists.  You  know  whether  there  are  faults 
in  it,  or  places  in  it  that  ought  to  l)e  strengthened. 

]Mr.  FiFER.  I  will  come  to  that,  Senator,  a  little  further  on.  ' 

Senator  Keax.  Before  you  pass  from  this  question  of  rate  making, 
rou  have  told  us  how  the  railroads  make  rates.  How  would  you 
make  a  rate? 

Mr.  FiFER.  Of  course  it  is  a  difficult  question  to  make  a  rate.  If 
the  reasonableness  of  a  rate  were  challenged,  I  know  of  no  better  way 
to  test  it,  no  better  standard  by  which  it  shall  be  measured,  than  to 
take  other  rates  throughout  the  country  on  the  same  product,  under 
like  circumstances  and  conditions,  and  find  out  if  you  can  whether 
the  rate  by  which  you  measure  the  challenged  rate  is  a  rate  that  is 
made  by  competition.  If  it  is,  and  is  a  rate  of  long  standing,  you 
can  not  go  verv  far  Avrong  in  establishing  that.  If  there  had  been 
no  railroads  yesterday  in  this  country,  and  to-day  they  were  all 
dropi3ed  down  on  us  just  as  they  are,  without  any  schedule  of  rates 
ever  having  existed,  and  you  told  all  the  traffic  managers  in  the 
United  States,  "  Now,  come  and  make  rates  for  these  railroads,"  they 
would  have  a  great  big  job.  But  that  is  not  the  case  at  all.  These 
rates  are  of  long  standing.  The  railroads  have  been  making  rates 
for  sixty  or  seventy-fi^-e  years,  and  there  are  standards  by  v.-hicii  these 
rates  are  measured. 

Take  all  the  common  law  that  it  has  taken  a  thousan.d  years  to  build 
up,  our  constitutions,  and  our  statutes.  Wipe  them  all  out,  and  then 
undertake  to  build  up  a  system  of  laws — either  by  this  body  of  men 
or  any  other — in  a  day,  and  you  will  find  that  you  will  have  a  great 
big  job  on  hand.  Constantly  society  and  legislative  bodies  are  fight- 
ing, so  to  speak,  on  the  skirmish  line.  New  questions  are  arising  every 
da3^  You  take  old  principles  and  apply  them  to  new  conditions,  and 
society  and  government  go  on  progressively  from  day  to  day.  Now 
and  then  you  encounter  a  new  principle — -the  railroad,  the  telegraph, 
and  the  telephone — and  all  these  questions  have  brought  up  new  con- 
ditions. They  raise  new  questions,  and,  so  far  as  the  courts  can,  they 
apply  the  old  principles  to  the  new  conditions,  as  every  judge  or  law- 
yer throughout  the  country  knows. 

So  with  rate  making.  There  is  a  sort  of  fixedness  about  it  that 
people  understand.  The  shippers  understand  it.  Everybody  who 
has  to  do  with  shipments  understands  it. 

Now,  gentlemen,  I  have  explained  a  condition  without  suggesting 
a  remedy.  I  shall  do  that  later  on.  Let  us  see  further  in  regard  to 
the  actual  condition  of  some  of  the  rates.  Glance  your  eye  upon  the 
map  hanging  upon  the  wall,  and  3'ou  will  see  that  between  the  Rock}' 
Mountains  and  the  Atlantic  seacoast  that  country  is  traversed  by  large 
navigable  rivers — the  Mississippi  and  the  Ohio  and  their  tributaries. 
You  will  see  that  the  Great  Lakes  reach  nearly  halfway  across  the 
continent.     That  water  communication  has  in  all  time,  and  will  for 


182  REGULATION    OF    RAILWAY    RATES. 

all  future  time,  modify,  regulate,  and  control  railroad  rates  through- 
out the  great  Mississippi  Valley.  I  could  explain,  and  it  would  be 
interesting,  if  you  had  time  to  listen,  how  one  water  rate  will  affect 
the  rates  over  a  large  country. 

Take  the  grain  rate  from  Chicago.  Generally,  when  navigation 
opens,  the  railroads  put  down  their  grain  rates,  by  reason  of  water 
competition,  2^  cents  on  a  hundred  pounds.  It  was  suggested  here, 
I  noticed,  last  week,  I  believe,  as  to  where  went  this  profit  derived 
from  the  demoralization  of  freight  rates.  Gentlemen,  from  the  best 
light  I  can  get  upon  the  subject,  I  believe  that  for  the  most  part  it 
goes  to  the  producer.  I  know  here  recently,  when  we  were  examining 
witnesses  in  regard  to  the  differentials  between  the  four  great  North 
Atlantic  seaports,  Boston,  New  York,  Philadelphia,  and  Baltimore, 
a  few  years  ago  there  was  a  wretched  demoralization  of  the  grain  rate 
from  the  West  to  the  Atlantic  seaboard,  bringing  it  down  to  7  cents  a 
hundred,  and  I  specifically  inquired  of  the  shippers  and  railroad  men 
where  that  profit  went.  It  was  said  the  railroads  were  carrying  at  a 
loss.  The  grain  men,  the  middlemen,  said  they  made  no  more  than 
when  the  rate  was  17  or  20  cents.  "  Where  did  it  go  ?  "  I  inquired. 
They  said  that  it  went  to  the  producer  for  the  main  part.  The  pro- 
ducers are  the  men  planting  corn  in  Illinois  to-day.  They  are  not 
here. 

Senator  Foraker.  Did  you  examine  the  market  reports  of  that 
period  to  see  whether  or  not  there  was  any  explanation  in  them  as  to 
what  became  of  the  profits  on  that  grain  ? 

Mr.  FiFER.  No. 

Senator  Foraker.  They  would  have  told  the  tale  conclusively, 
would  they  not  ? 

Mr.  FiFER.  I  did  not  examine  the  market  quotations  of  that  time. 
This  question  was  not  really  in  issue,  and  I  inquired  about  it  for  gen- 
eral information  only.  But  this  investigation  gave  the  members  the 
opportunity  to  inquire  about  this  matter,  to  bring  up  that  question. 

Senator  Foraker.  I  am  not  disputing  your  proposition,  but  would 
not  the  market  quotations  for  that  time  have  told  that  tale  conclu- 
sively ? 

Mr.  FiFER.  Yes ;  they  would  have  told  exactly ;  but  this  was  only 
a  collateral  question. 

Senator  Foraker.  It  seemed  to  me  that  those  prices  would  show 
whether  the  producers  got  that  profit  or  not. 

Senator  Cullom.  ^¥hiit  was  the  date  of  that  rate  cutting  when  the 
rate  was  7  cents? 

Mr.  FiFER.  I  do  not  know  exactly  when  it  was.  ^Ir.  Chairman — 
about  four  or  five  years  ago. 

Senator  Foraicer..  A^^iat  was  the  date  when  the  rates  fell  and  when 
you  investigated  the  subject  of  differentials  as  between  Boston,  New 
York,  Philadelphia,  and  Baltimore? 

Commissioner  Knapp.  I  think  it  Avas  about  the  beginning  of  1904, 
and  related  to  ex-lake  grain  from  Buffalo. 

Senator  Foraker.  He  was  not  talking  about  any  ex-lake  grain. 

Mr.  FiFER.  No,  Mr.  Chairman,  you  did  not  understand  the  inquiry. 
There  was  a  rate  war.  The  roads  leading  from  Buffalo  to  New  York 
insisted  that  they  ought  to  share  in  Avhat  is  called  the  ex-lake  grain — 
that  is,  the  grain  that  goes  to  Buffalo  by  water,  and  there  had  been  a 
differential  in  favor  of  Baltimore  and  Philadelphia ;    but  they  got 


EEGULATION    OF   EAILWAY   KATES.  183 

into  a  war  and  reduced  the  rate  down  to  the  fraction  of  a  cent,  out- 
rageously :   th.e  rates  were  utterly  demoralized. 

Senator  Kean.  You  say  that  was  in  1904? 

Mr.  FiFER.  In  1901.  but  the  demoralization  of  grain  rates  was 
previous  to  that.     The  testimony  in  that  case  will  show. 

I  haA-e  shown  you  what  there  is  on  the  east  side  of  tht*  Rocky 
Mountains.  Now'  glance  your  eye  to  the  Pacific  coast,  and  3'ou  will 
see  that  there  are  "no  great  rivers  running  from  the  interior  to  the 
coast;  no  lakes,  except  in  the  extreme  northern  portion  perhaps. 

Now.  if  you  please,  examine  the  railroad  rates  of  what  is  called  the 
Middle  "West  and  the  Pacific  coast.  I  am  not  good  enough  in  remem- 
bering figures  to  run  through  that  in  my  mind  particularly,  and  I 
failed  to  make  copies  of  them;  but  the  tariff's  are  on  file  in  our  office 
and  will  show  for  themselves.  To  begin  with,  from  the  Missouri 
River  to  the  Atlantic  seaboard  there  is  what  is  called  a  blanket  or 
postage-stamp  rate,  so  that  a  merchant  going  from  San  Francisco 
East  to  buy  a^oods — it  makes  no  difference  whether  he  buys  at  Omaha 
or  Chicago,  Pittsburg  or  New  York — his  freight  from  the  point 
where  the^ goods  are  purchased  is  exactly  the  same  to  the  Pacific  ter- 
minal— Los  Angeles.  San  Francisco,  Portland,  and  Seattle.  It  is 
exactly  the  same.  Now,  it  is  just  the  reverse  when  you  get  on  to  the 
Pacific  coast.  I  draw  those  comparisons  in  proof  of  my  assertion  that 
railroads,  when  they  get  a  factory  or  an  industry  where  it  has  no  com- 
petition, when  it  is  helpless,  so  to  speak,  they  make  the  rate — and  that 
is  the  only  limitation — just  exactly  what  the  traffic  will  bear.  I  think 
those  western  mountain  rates,  so  called,  are  too  high.  Now,  I  had  our 
auditor  examine  some  of  them  only  a  short  time  ago,  and  let  us  take 
the  matter  of  window-shade  cloth,  just  as  an  example.  From  New- 
York  to  Salt  Lake  City  the  rate  is  $2.30  per  hundred.  From  New- 
York  City  to  San  Francisco  it  is  $1.  You  take  cotton  goods.  From 
New  York  to  San  Francisco  it  is  $1,  and  from  New  York  to  Salt  Lake 
City  it  is  just  double,  $2. 

Senator  Foraker.  Why  is  that? 

Mr.  FiFER.  AYell,  I  will  tell  you.  It  is  a  long  story,  but  I  need  not 
tell  it  all. 

Senator  Foraker.  No  ;  you  can  tell  it  in  a  word. 

Mr.  FiFER.  That  was  affected  by  the  Avater  competition  from 
NeAv  York,  and  unless  the  railroads  make  a  rate  at  the  Pacific  coast 
terminals  that  Avill  take  the  freight  from  the  w^ater  and  put  it  upon 
the  rails,  it  Avill  go  hj  water,  and  they  must  meet  the  w^ater  competi- 
tion at  the  Pacific  coast  terminals.  They  make  a  very  plausible  and, 
I  Avill  say.  in  many  instances  a  very  just  argument  in  the  advocacy  of 
the  lesser  cost  for  a  longer  haul.  I  wall  say  further  that  the  rail- 
road, in  my  judgment,  could  not  get  along  in  this  country  Avithout 
that  provision,  Avithout  that  elasticity. 

Senator  Foraker.  Then  the  low  rate  for  the  through  haul  is,  I 
conclude,  all  right,  in  your  judgment? 

Mr.  Fifer.  They  meet  that,  and  certainly  nobody  can  object  to  a 
low  rate. 

Senator  Foraker.  They  must  either  give  the  low  rate  or  let  the 
business  go  ? 

Mr.  Fifer.  Yes.  I  will  explain  that.  They  make  this  argument,  for 
instance — and  Avhat  I  say  in  respect  to  this  wall  apply  to  everA^  other 
Pacific  coast  terminal.    They  say,  for  instance,  Ave  have  a  railroad  run- 


l54  EEGULATIOX    OF    RAILWAY    RATES. 

ning  from  Salt  Lake  on.  AVe  have  what  isknoATii  in  raih'oad  parhmce 
as  '•  fixed  "  charoes.  and  thev  sav  that  if  Ave  do  not  carrv  that  freio-ht 
and  meet  tlie  water  competition  Ave  can  not  carry  it  at  alh  That 
freig-lit.  in  theory,  is  just  the  same — it  is  treated  by  the  raih-oads 
exactly  the  same  as  if  it  all  reached  the  Pacific  coast  by  Avater  or 
originated  at  that  point,  was  manufactured  there,  and  then  comes 
east.  That  is  the  principle  on  which  it  is  done.  They  say.  further, 
that  Ave  can  make  a  little  something  hj  hauling  that  freight  to  the 
terminal,  and  if  we  do  not  do  it  the  water  will  take  it  there.  The 
freight  Avill  go  there  at  the  reduced  price,  and  they  contend,  therefore, 
that  it  is  no  discrimination  to  Salt  Lake  City.  proA'ided  ahvaA's  that 
the  rate  to  Salt  Lake  City  is  a  reasonable  rale.  Xow,  that  is  their 
position. 

Senator  Foraker.  And  you  come  back,  then,  to  that  question  as  to 
whether  the  rate  to  Salt  Lake  Cit}^  is  reasonable? 

Mr.  FiFER.  Yes;  you  get  back  to  that.  Now,  there  is  Avhere  the 
greatest  stumbling  block  is  for  traffic  men  that  I  haA'^e  found.  It 
arises  just  there.  There  is  no  way  of  getting  around  it  in  the  world, 
and  it  is  this:  TheA'  say  they  make  a  small  profit,  and  the}'  say  by 
engaging  in  that  traffic  to  the  terminal  theA'  can  get  a  little  something, 
and  therefore  make  even  less  on  the  other  lines  of  their  roads. 

Senator  Foraker.  That  is,  even  less  to  Salt  Lake  City,  keeping  up 
your  illustration  ? 

Mr.  Fifer.  Yes;  but  if  they  would  spread  that  rate  all  OA^er  ,th« 
lines  of  their  road  thcA'  Avould  soon  be  in  chancer A^  and  I  think  that 
IS  true. 

Senator  Foraker.  That  is,  a^ou  do  think  that  a  dollar  rate,  for  in- 
stance, for  a  long  haul  Avould  not  be  a  pro^table  rate,  if  that  Avere 
spread  OA^er  the  whole  system  ? 

Mr.  Fifer.  I  do  not  think  so.  I  think  they  are  right  about  that, 
but  here  comes  the  trouble  for  railroad  traffic  men,  and  I  think  they 
are  the  smartest  men  in  the  world.  Allien  we  Avere  iiiA^estigatina:  that 
water  competition  around  the  Horn,  because  we  had  that  question 
up.  they  Avould  explain  it  and  make  you  see  it  so  A'iA'idly  that  you 
could  fairly  hear  the  flapping  of  the  sails  as  the  A'essels  rounded  Cape 
Horn.  So  that  the\'  can  embellish  those  things.  I  do  not  dare  sav 
that  they  SAvear  to  Avhat  is  not  true.  It  does  not  lie  m  my  mouth  to 
come  here  and  say  that,  and  I  do  not,  but  they  can  make  their  side 
appear  the  best  ahvays,  and  here  is  a  point  that  is  ahvays  difficult  for 
them  to  get  around.  If.  for  instance,  you  take  the  rate  I  haA^e  men- 
tioned on  AvindoAv-shade  cloth  from  Xew  York  to  Salt  Lake  City — 
$2.?i0 — carrying  it  800  miles  farther  they  charge  only  $1.  and  that 
dollar  rate  affords  them  a  sliglit  profit,  is  not  their  rate  of  $2.30  ex- 
cessiA^e  to  Salt  Lake  ?     That  is  the  question. 

Senator  CullojNI.  Does  not  that  fact  almost  conclusively  make  it 
appear  to  be  unreasonable  to  charge  $2.30? 

Mr.  Fifer.  Yes.  Xoav,  let  us  be  fair  about  it.  The  men  Avho  build 
a  citj^  in  the  interior-  of  a  continent,  in  a  mountainous  district,  can  not 
expect  to  get  as  reasonable  a  rate  as  the  men  who  build  their  city  upon 
the  shore  of  the  sea.  Anybody  can  see  that,  and  yet.  granting  all 
that,  do  not  the  conditions  Avhich  I  liaA'e  stated  indicate  that  the 
rate  upon  these  articles  to  Salt  Lake  City  is  excessive,  illustrating  my 
original  proposition  that  the  railroads  impose  such  tariffs  Avhen  they 
haA^e  a  factory  or  an  industrA'  all  in  their  power — just  such  tariff  as 


REGULATION    OF    EAILWAY   RATES,  185 

the  traffic  will  bear  ?  Xow.  Mr.  Hines  in  the  course  of  his  testimony 
said  that  he  would  ten  times  rather  have  an  industry  on  his  road 
where  there  was  no  competition  than  an  industry  at  the  end  of  his 
line  where  there  was  competition.  AVhy  would  he  rather  have  that? 
Turn  it  over  and  look  at  it.  Simply  because  at  the  end  of  his  road 
the  rate  would  be  fixed  by  competition.  AVhen  it  is  a  solitary  indus- 
try on  a  single  line  of  railroad  and  that  railroad  his.  he  will  determine 
what  the  rate  shall  be.  and  that  is  why  he  would  ten  times  j^refer  to 
have  an  industry  on  his  road.  He  said  he  would  foster  it,  and  so  he 
will. 

Senator  Foraker.  I  want  to  ask  j^ou  a  question  right  there. 
Assuming,  now.  that  the  difference  in  the  rate  between  San  Francisco 
and  Salt  Lake  City  is  conclusive,  as  Senator  Cullom  says,  as  showing 
that  the  rate  to  Salt  Lake  City  is  unreasonable,  what  would  that  be — 
a  discrimination  against  Salt  Lake  City? 

Mr.  FiFER.  Xo :  an  excessive  rate  to  Salt  Lake. 

Senator  Foraker.  And  if  so,  have  you  or  not  a  remedy,  in  your 
opinion,  already? 

Mr.  FiFER.  I  was  going  to  come  to  that  later  on ;  I  was  going  to 
speak  of  that. 

Senator  Foraker.  I  do  not  want  to  interru]3t  the  course  of  your 
argument,  but  I  want  to  know  right  now,  when  you  reach  that 
point — admitting  that  this  higher  rate  to  an  intermediate  point  is  a 
discrimination  against  that  locality,  being  on  the  same  line — have 
you  not  a  complete  remedy  now  under  the  Elkins  law ;  or  if  it  be  on 
different  lines  and  the  rate  is  so  high  as  to  amount  to  a  discrimina- 
tion in  favor  of  a  locality  on  another  line,  have  you  not  a  remedy,  or 
have  you  ?     I  simply  want  the  benefit  of  your  opinion. 

Mr.  FiFER.  I  will  say  this  much  right  now  in  regard  to  that :  You 
take  the  long  and  short  haul  clause  and  5'^ou  take  the  third  provision, 
that  there  shall  be  no  discrimination  between  localities.  Xow,  it 
seems  to  me  that  both  those  provisions  might  api3ly  to  the  situation. 

Senator  P'oraker.  You,  of  course,  agree  with  the  construction  of 
the  long  and  short  haul  clause  that  the  Interstate  Commerce  Com- 
mission has  given  to  it  and  that  the  courts  have  given  to  it  ? 

]Mr.  FiFER.  Oh.  I  think  perhaps  I  bow  to  the  decision  of  the  court 
and  agree  that  the  court  is  right. 

Senator  Foraker.  You  do  not  bow;  you  are  a  part  of  the  decision? 

Mr.  Fifer.  Yes:  but  at  the  same  time  the  legislature  could  have 
modified  that  long  and  short  haul  clause  in  this  way :  It  now  savs 
that  the  railroad  shall  not  charge  more  for  a  short  haul  than  it  does 
for  a  long  haul  over  the  same  line  of  road  in  the  same  direction, 
where  the  shorter  haul  is  included  in  the  longer  one.  where  the  cir- 
cumstances and  conditions  are  substantially  the  same.  Xow,  they 
could  have  made  it  still  more  faA'orable  to  the  railroads,  and  said, 
'•  where  there  is  the  slightest  competition."  They  have  said,  ''  where 
the  circumstances  and  conditions  are  substantially  the  same."  The 
view  of  the  Commission  has  been  overruled  by  the  courts  several 
times  regarding  this  clause. 

Senator  Foraker.  Xow.  we  want  to  get  to  the  point  of  this  whole 
controversy.  The  question  is  whether  we  are  going  to  amend  or 
supplement  this  law.  "Would  you  have  us  strike  out  of  the  long  and 
short  haul  clause,  that  provision  "  under  substantially  similar  cir- 
cumstances and  conditions."  and  make  it  an  arbitrary,  riofid  rule. 


186  EEGULATION    OF    RAILWAY   RATES. 

that  there  shall  be  more  charged  for  the  long  haul,  proportionately, 
than  for  the  short  haul  i 

Mr.  FiFER.  Just  the  exact  limitation  that  ought  to  be  placed  there 
is  not  clear  in  ni}'  own  mind. 

Senator  Foraker.  Tf  we  strike  it  out,  transcontinental  lines  Avould 
go  absolutely  out  of  transcontinental  business,  would  they  not,  so 
far  as  their  long  hauls  are  concerned  ? 

Mr.  FiFER.  It  would  not  do  to  apply  it  on  the  Pacific  coast,  be- 
cause the  water  competition  on  that  coast  is  a  controlling  factor.  It 
would  not  do,  but  just  what  limitation - 

Senator  Cullom.  What  limitation  would  you  put  upon  the  statute 
making  it  stronger  against  extravagant  differences? 

jNIr.  Fii-^ER.  I  have  thought  if  it  was  left  to  the  Commission  to  say 
that  thev  should  examine  mto  and  permit  this  thing  to  be  done 

Senator  Dolliver.  Didn't  they  do  exactly  that  same  thing  when 
the  Commission  was  first  organized? 

Mr.  FiFER.  I  could  not  speak  in  reference  to  that,  because  I  have 
only  been  on  the  Commission  a  short  time. 

Senator  Dolliver.  How  is  that,  Judge  Knapp  ?  Did  not  the  Com- 
mission entertain  the  petitions  of  a  multitude  of  roads  to  be  relieved 
of  this  short-haul  provision  ? 

Mr.  Commissioner  Knapp.  Broadly  speaking,  I  think  the  carriers 
generally  assumed  that  the  fourth  section  imposed  a  limitation  which 
they  must  either  observe  or  get  relief  from  under  some  other  clause, 
and  at  least  to  avoid  any  risk,  and,  as  a  matter  of  prudence,  they 
appear  to  have  made  very  general  applications  for  relief. 

Senator  Dolliver.  What  action  did  the  Commission  take  on  those 
applications  ? 

Mr.  Commissioner  Knapp.  You  will  find  that  very  fully  set  forth 
in  the  opinion  delivered  in  what  is  known  as  the  "  Louisville  and 
Nashville  Case,"  in  the  early  work  of  the  Commission. 

Senator  Foraker.  You  take  the  same  position  there  that  the  courts 
take,  do  you  not,  that  you  would  take  into  account  the  question  of 
conditions  ? 

Mr.  Commissioner  Knapp.  No  ;  the  courts  have  given  a  much 
more  liberal  and  extensive  meaning  to  the  phrase  "  similar  circum- 
stances and  conditions  "  than  the  Commission,  I  think. 

Senator  Foraker.  Which  case  is  it  that  you  refer  to? 

Mr.  Commissioner  Knapp.  It  is  in  the  first  volume,  in  the  first  year. 

Senator  Foraker.  But  I  was  speaking  of  recent  decisions.  In  all 
your  recent  decisions  you  have  followed  the  interpretation,  of  course, 
given  by  the  courts? 

Mr.  Commissioner  Knapp.  Oh.  certainly;  so  that,  if  I  may  have 
a  word,  if  I  understand  the  law  now,  if  in  point  of  fact  the  circum- 
stances and  conditions  at  a  long-distance  point  are  substantially  dis- 
similar, no  matter  for  what  reason,  the  fourth  section  does  not  apply. 

Mr.  FiFER.  There  was  a  gentleman  who  appeared  here  last  week 
from  Tennessee,  a  gentleman  who  so  delightfully  entertained  and 
instructed  us  all  in" regard  to  the  growth  and  development  of  the 
South,  all  brought  about  by  the  railroads.  You  remember  his  well- 
turned  periods  and  his  flashes  of  rhetoric — very  eloquent  indeed. 

Senator  Foraker.  There  have  been  so  many  gentlemen  of  that 
kind  before  the  committee  recently  that  I  do  not  recall  him. 

Mr.  FiFER.  This  was  one  special  gentleman  who  was  from  Ten- 


KEGULATIOF    OP    RAILWAY   RATES.  187 

nessee.  As  the  gentleman  progressed  he  became  more  serious,  and 
as  he  scurried  up  and  doAvn  the  gussets  and  seams  of  Hamilton's 
and  Jefferson's  old  clothes  and  described  the  awful  chasm  toward 
which  the  country  was  tending — that  is,  Government  ownership  of 
railroads — I  confess  that  the  cold  chills  went  up  my  spinal  column, 
my  teeth  chattered,  aiicl  my  knees  knocked  together,  as  I  seemed  to 
stand  on  the  awful  brink  of  this  awful  precipice,  and  I  looked 
around  for  some  of  those  impoverished  widows  and  orphans  expect- 
ing every  moment  to  be  precipitated  to  the  base  of  that  abyss.  Now, 
he  said  that  he  represented  the  entire  South,  as  I  remember  his  lan- 
guage, in  this  question. 

Now,  gentlemen,  I  beg  you  to  remember  that  the  South  is  a  great 
big  country,  and  if  he  were  representing  the  whole  South  on  this 
industrial  or  rate  c|uestion  he  certainly  must  be  a  very  busy  man,  and 
it  was  very  kind  in  Judge  Clements  to  give  way  until  he  could  give 
his  testimony.  Let  us  examine  and  see  whether  the  gentleman  rep- 
resents all  the  southern  section  on  this  rate  question.  Down  on  the 
northern  limits  of  South  Carolina,  or  the  southern  limits  of  North 
Carolina,  is  the  city  of  Charlotte,  of  about  20.000  inhabitants.  From 
New  Orleans  to  what  is  known  as  the  "  Virginia  cities  " — Richmond, 
Lynchburg,  and  Norfolk — is,  in  round  numbers,  about  800  miles. 
Charlotte  is  about  halfway,  about  half  that  distance.  The  people 
doAvn  there  complained  to  the  Commission  of  this  state  of  facts — 
that  on  some  articles  of  traffic  from  New  Orleans  to  Charlotte  the 
rate  is  double  what  it  is  to  the  Virginia  cities,  twice  the  distance. 
There  is  no  railroad  competition.  The  Southern  Railway  and  the 
Seaboard  Air  Line  reach  the  same  city,  but  they  claimed  that  they 
were  under  the  same  control  and  the  same  management,  and  that 
competition  was  done  away  with.  But  that  state  of  facts  existed. 
Now.  then,  the  other  side  of  this  case,  the  side  of  the  railroads,  is 
that  they  want  to  do  business  in  the  Virginia  cities,  and  must  meet 
the  water  competition  that  reaches  the  Virginia  cities  by  the  ocean — - 
the  .same  old  question,  but  I  call  attention  to  this  disparity  now. 
Per  ton  per  mile  the  rate  to  Charlotte  is  four  times  what  it  is  to  the 
Virginia  cities  per  ton  per  mile.  If  they  can  do  business  at  a  slight 
profit,  however  slight,  carrying  the  same  goods  right  through  Char- 
lotte— I  leave  it  to  you — whether  if  they  do  business  at  a  slight  profit 
to  the  Virginia  cities  the  intermediate  rate  is  not  too  high. 

Senator  Foraker.  That  is  on  the  same  line  of  road,  is  it  ? 

Mr.  FiFER.  The  same  line  of  road,  the  Southern  road.  I  don't 
know  whether  the  Southern  road  reaches  all  the  Virginia  cities  or 
not. 

Senator  Foraker.  How  did  that  come  to  the  attention  of  the 
Interstate  Commerce  Commission? 

Mr.  FiEER.  It  came  to  the  attention  of  the  Interstate  Commerce 
Commission  by  complaint  duly  filed. 

Senator  Cullom.  Have  you  tried  the  case? 

Mr.  FiFER.  The  testimony  has  been  heard,  but  no  decision  has  been 
made.  I  would  not  like  of  course  to  express  any  opinion  at  this  time. 
These  facts  I  call  attention  to  are  public  propert}^  now. 

Senator  Foraker.  Now,  it  was  identically  that  sort  of  thing  that 
we,  after  a  great  deal  of  consideration,  undertook  to  provide  for  in 
the  Elkins  law  where  it  provides  in  the  third  section  that  all  discrimi- 


188  REGULATION    OF    EAILWAY   RATES. 

nations  of  that  character  particularly  might  be  enjoined,  and  it 
would  be  the  duty  of  the  court  to  proceed  summarily,  provided  the 
Interstate  Connnerce  Commission  would  make  the  comphiint. 

Mr.  FiFER.  Senator,  you  Avill  find  that  is  the  most  difficult  tiling,  in 
my  judgment,  jou  will  have  to  deal  with  when  3'ou  undertake  to  crys- 
tallize all  this  talk  into  a  bill.  It  is  easy  to  talk;  it  is  easy  to  find 
fault. 

Senator  Foraker.  What  I  want  to  find  out  is  why  did  not  the 
Interstate  Commerce  Commission.  Avith  this  law  before  it  and  that 
complaint  made  out,  institute  a  proceeding  under  this  statute. 

Mr.  FiFER.  Well,  I  thought  I  would  speak  of  that  in  its  proper 
place. 

Senator  Foraker.  I  just  want  to  get  at  the  facts. 

Mr.  FiFER.  M}^  construction  of  the  law  is  that  the  courts  could  do 
no  more  than  the  Commission  could  do. 

Senator  Foraker.  They  could  enjoin  it,  couldn't  thej'? 

Mr.  FiFER.  The  courts  could  enjoin  them  from  charging  that  rate. 

Senator  Foraker.  No;  could  enjoin  the  discrimination. 
'  Mr.  FiFER.  Well,  enjoin  the  discrimination.  I  have  already  pointed 
out  that  the  violation  of  each  one  of  these  sections  involves  a  rate, 
and  while  the  court,  if  the  rate  is  too  high,  may  do  as  the  Commis- 
sion does,  declare  the  rate  too  high  and  excessive,  and  ma}"  enjoin  its 
enforcement,  yet  there  it  must  stop. 

Senator  Foraker.  You  take  the  vieAv,  do  you,  that  the  court  has  no 
right,  even  though  you  would  seek  to  make  that  an  issue,  to  enjoin 
anything  in  excess  of  what  was  a  reasonable  rate,  which  the  law  says 
shall  be  the  lawful  rate  ? 

Mr.  FiFER.  Yes;  the  court  might  enjoin  the  rate  that  is  in,  but  I 
do  not  believe  that  the  court  can  ever  substitute  one  rate  for  another. 

Senator  Foraker.  Nobody  ever  contended  that  any  court  could. 
That  never  was  thought  of,  as  I  understand  it,  by  anybody;  but 
there  is  a  difference  of  opinion,  and  I  onl}^  want  to  know  whether 
you  as  a  lawyer  believe  that  it  is  not  competent  for  a  court  of  equity 
to  enjoin  anything  wdiich  you  allege  to  be  in  excess  of  a  reasonable 
rate,  if  they  found  your  allegation  had  been  sustained  by  the  proof. 

Mr.  FiFER,  The  decision  in  what  we  call  the  Wichita  Case  would 
indicate  that  a  court  would  enjoin  unjust  or  undue  discrimination, 
and  that  the  court  would  enjoin  an  excessive  rate.  The  court,  in 
other  words,  could  do  just  what  the  Commission  does,  and  no  more, 
and  if  you  leave  the  Commission  and  go  to  the  court  you  are  travel- 
ing in  a  circle  and  reach  the  same  point  from  which  you  started. 

Senator  Foraker.  Is  there  not  this  difference:  The  Commission 
can  condemn  and  that  is  all  they  can  do;  but  the  court  can  at  once 
enjoin  not  only  the  collection  of  the  rate  which  may  be  unreasonable, 
but  the  collection  of  any  rate  which  is  in  excess  of  the  lawful  rate  ? 

Mr.  FiFER.  Yes ;  but  who  is  to  determine  what  the  reasonable  rate 
will  be? 

Senator  Foraker.  The  court.  Is  there  any  trouble  about  that  as 
a  proposition  of  law  ? 

Mr.  Fifer.  I  think  there  is  a  great  deal  of  trouble. 

Senator  Foraker.  I  would  like  to  have  some  lawyer  point  it  out. 

]Mr.  Fifer.  There  is  a  trial,  we  will  say,  in  your  State  court  before 
a  jur3^  The  jury  renders  excessive  damages,  and  you  take  the  case 
to  the  appellate  court.     The  court  may  reverse  it  solely  on  account 


REGULATION    OP   RAILWAY   RATES.  189 

of  the  excessive  damages.  Can  the  court  fix  what  the  verdict  ought 
to  be? 

Senator  Foeaker.  Well,  it  is  not  an  analogous  case,  because  the 
interstate-commerce  act  says  that  a  raih'oad  may  charge  a  reasonable 
rate  and  that  it  shall  not  charge  any  more.  In  other  words,  a  rea- 
sonable rate  is  a  lawful  rate  and  anything  in  excess  of  a  reasonable 
rate  is  unlawful.  Now,  suppose  they  charge  $1.25  where  they  should 
charge  $1.  The  question  is  not  whether  $1.25  is  unreasonable,  unless 
the  jDleader  raises  only  that  issue ;  it  is  certainly  competent  for  him  to 
raise  the  issue  whether  anything  in  excess  of  $1  is  unreasonable  and 
because  if  $1  be  the  maximum  reasonable  rate  that  is  the  rate  pre- 
scribed by  the  statute.  The  court  can  enjoin  that  on  a  state  of  facts 
presented,  but  of  course  if  to-morrow  the  conditions  change,  that 
injunction  would  not  be  binding  under  changed  conditions,  though  a 
railroad  would  not  be  very  likely  to  violate  what  the  court  had  found. 

jVIr.  FiFER.  AYhat  kind  of  a  decree  would  3'ou  enroll?  Enjoin  the 
excessive  rate,  of  course.  To  go  further  and  enjoin  an  unreasonable 
rate  as  unlawful  without  naming  the  unreasonable  rate  vou  Avould 
condenni  what  the  statute  already  condemns,  and  the  question  is  still 
left  open  as  to  what  a  reasonable  rate  is.  If  you  fix  that,  then  it  is 
the  fixing  of  a  rate  b}'  the  court.  But  lawyers  perhaps  will  differ  in 
•regard  to  the  duties  and  power  and  the  rights  of  courts  in  that  par- 
ticular. .  I  expect  3T)u  and  I  differ  in  respect  to  that. 

Senator  Foraker.  I  hear  a  great  discussion  of  the  right  of  a  court 
to  fix  a  rate,  which  is  simply  striking  at  a  man  of  straw.  I  never 
heard  am^body  propose  to  have  rates  fixed  by  a  court. 

Mr.  FiFER.  I  understood  from  some  inquiries  here  yesterday  it 
was  supposed  that  the  court,  in  saying  that  a  rate  was  too  high,  by 
that  simple  mental  operation  must  of  necessity  decide  what  was  a 
reasonable  rate  and  might  suggest  it.  I  think  you  asked  that  ques- 
tion yourself. 

Senator  Foraker.  I  perhaps  did.  I  am  only  trying  to  get  your 
view  now. 

Mr.  FiFER.  My  view  is  this,  that  the  rate-making  power  is  the 
exercise  of  a  legislative  power. 

Senator  Foraker.  Yes;   we  are  all  agreed  upon  that. 

Mr.  Fifer.  That  you  can  confer  that  power  upon  some  adminis- 
trative body,  but  you  can  not  confer  it  upon  the  courts;  that  you 
can  not  confer  a  little  power  upon  the  courts  any  more  than  you 
can  confer  a  big  poAv.er;  that  the  size  of  the  dose  does  not  change 
the  quality  of  the  medicine.  If  yoii  can  confer  a  little  power  to 
fix  rates,  you  can  confer  upon  the  courts  the  power  to  make  the 
entire  schedule. 

Senator  Foraker.  "Well,  we  will  agree  you  can  not  confer  any.  I 
wanted  simply  to  get  the  benefit  of  your  legal  opinion,  and  it  is 
important  because  you  are  a  member  of  the  Commission  and  a 
lawyer  of  experience. 

Senator  Cullom.  I  want  to  follow  that  inquiry  of  Senator  Fora- 
ker's  a  little  further.  As  I  understand  it,  you  do  agree  that  a  judge, 
a  court,  if  an  application  is  made  to  it  for  an  injunction  under  the 
Elkins  law,  may  grant  the  injunction. 

Mr.  Fifer.  Yes. 

Senator  Cullom.  And  by  that  declare  that  the  common  carrier 
shall  not  charge  that  rate  any  longer  ?  1 


190  REGULATIOISr    OF    RAILWAY    RATES. 

Mr.  FiFER.  Yes. 

Senator  Cullom.  Now,  then,  what  is  the  result?  If  they  do  busi- 
ness, they  have  to  put  down  the  rate. 

jSIr.  FiFER.  Yes. 

Senator  Cullom.  Well,  that  is  what  we  want. 

Mr.  FiFER.  Just  the  power  that  the  Commission  can  exercise,  and 
that  is  what  I  say.  You  are  traveling  in  a  circle  and  you  do  not  get 
anywhere. 

Senator  Cullom.  The  Commission  does  not  need  to  exercise  any 
power  at  all  except  to  make  application  to  the  court  for  that 
injunction. 

Mr.  FiFER.  That  is  all  true.  I  think  we  understand  one  another, 
but  while  we  are  on  that  I  want  to  note  another  point,  and  that  is 
that  our  railroad  friends  say  that  they  do  not  want  the  Commission 
to  lay  its  ignorant  hands  upon  their  freight  rates — that  they  want 
men  of  experience — and  yet  they  say  that  they  want  to  go  to  the 
court!=.  Are  you  going  to  turn  all  the  lawyers  off  the  bench  and  put 
on  railroad  men?  Who  is  to  have  the  final  say  about  this?  It  is  the 
courts.    Well,  are  they  lawyers? 

Now,  there  is  this  further  physical  difficulty  in  regard  to  the  courts, 
1  am  trying  to  aid  you,  gentlemen,  if  I  can,  to  a  proper  solution  of 
this  difficulty. 

Senator  Foraker.  You  have  to  go  to  the  court  eventually. 

Mr.  FiFER.  You  have  to  go  to  the  court  eventually,  and  you  must 
go  before  a  body  of  men  who  are  not  railroad  experts,  and  there  is 
where  these  railroad  men  say  you  ought  to  go  in  the  first  place. 

Senator  Foraker.  If  they  have  the  final  say,  why  not? 

Mr.  Fifer.  Well,  that  is  the  question.  Now,  you  see  the  truth  of  it 
is  these  railroad  experts  do  fix  their  own  rates  in  the  first  instance,  and 
I  say  it  with  all  due  respect  to  the  courts,  they  do  not  like  to  dig 
through  this  kind  of  cases.  They  are  lacking  somewhat  in  the  tech- 
nical experience.  It  is  a  pleasure  for  a  good  lawyer  to  pass  upon  a 
clean-cut  question  of  law,  without  all  this  physical  labor  of  running 
through  large  records  of  20,000  pages,  as  we  sometimes  have.  We 
have  one  case  now  where  the  evidence  is  taken  and  it  is  to  be  argued 
0X1  the  25th  day  of  May,  where  there  are  20,000  pages  of  testimony. 
Now,  we  did  not  bring  this  lawsuit.  It  was  the  cattlemen  of  the 
Southwest  Avho  brought  it,  and  all  their  testimony  had  some  bearing 
on  the  question.    We  had  to  hear  it. 

Now,  think  of  hurling  a  volume  of  testimonv  of  that  kind  at  a 
supreme  court  or  a  circuit  court  or  a  district  court.  How  much  con- 
sideration, with  all  due  respect  to  the  court,  would  it  give?  It  must 
be  a  body  of  men  who  are  in  and  with  and  of  this  question,  studying 
it  day  by  day  and  knowing  something  about  it,  in  my  judgment. 
Now,  there  is  another  difficulty,  which  is  purely  physical,  and  that 
is  you  would  have  to  make  a  traveling  menagerie  of  these  courts. 
In  this  cattle  case  we  took  testimony  at  Fort  Worth,  Chicago,  St. 
Louis,  and  Denver.  Would  you  have  the  courts  travel  around? 
That  is  a  necessity,  because  a  lot  of  merchants  from  different  cities 
are  all  interested  in  the  same  rate.  They  are  busy  men.  Our  law 
provides  that  the  Commission  can  go  to  the  place  Avhere  the  com- 
plaint is  made  and  take  the  testimony.  Now,  to  bring  up  a  perfect 
cohort  of  witnesses  from  Denver  to  Washington  and  from  St.  Louis 
and  Chicago  and  Fort  Worth  would  be  a  substantial  denial  of  jus- 


REGULATION    OF   RAILWAY   RATES.  191 


tice.  You  must  go  where  this  testimony  is  to  be  found  and  wliere 
the  men  live. 

Now,  there  is  that  further  difficulty  in  regard  to  submitting  this 
question  entireh'  to  a  court. 

Senator  Cullom.  I  understand  from  the  general  tenor  of  your 
remarlvs  that  j'ou  believe  that  this  Commission  or  a  commission  ought 
to  have  this  power  extended,  so  that  when  it  finds  a  rate  is  unreason- 
able it  can  find  what  is  a  reasonable  rate. 

Mr.  FiFER.  I  will  answer  that  in  this  way.  that  I  stand  with  the 
President — his  message  has  been  discussed  here,  and  in  that  connec- 
tion I  want  to  say  this:  I  do  not  agree  with  our  railroad  friends 
that  if  the  Commission  was  given  this  power  to  fix  what  is  a  reason- 
able rate  it  would  turn  the  world  upside  down.  I  think  that  the  earth 
Avould  continue  to  turn  on  its  axis  and  the  sun  would  rise  and  set 
as  of  yore,  and  these  gentlemen  would  do  business  at  the  old  stand, 
with  jperhaps  some  little  fear  of  doing  anything  that  might  call 
down  on  their  heads  the  condemnation  of  the  Commission.  Now,  I 
believe  that  the  mere  fact  that  the  power  exists  in  some  body  of  men 
to  regulate  rates  will  make  the  railroads  more  cautious  and  more  care- 
ful than  they  otherwise  would  be.  The  man  who  is  whipped  the 
easiest  is  generally  whipped  the  oftenest;  and  so  if  there  is  no  power. 
and  the  railroads  can  run  over  the  Commission,  they  will  continue 
to  run  over  them.  If  the  power  exists,  it  would  not  be  necessary 
to  exercise  it,  in  my  judgment,  very  often.  When  these  traffic 
associations  met  and  formulated  rates — and  I  do  not  know  but  Avhat 
they  ought  to  be  legalized  in  some  way,  because  they  do  it  anyhow — 
they  would  say,  "  Here,  we  had  better  not  raise  that  rate;  if  we  do,  we 
will  get  into  trouble  with  the  Interstate  Commerce  Commission,"  and 
I  believe  that  that  would  prevent  the  raising  of  many  rates.  Now, 
just  pursuing  that  a  step  further.  You  have  heard  very  often  from 
our  railroad  friends  that  they  lower  many  rates,  and  yet  they  say  the 
lowering  of  a  rate  will  demoralize  business.  They  have  lowered 
hundreds  of  rates  in  recent  years.  I  suppose  they  lowered  them  be- 
cause they  were  too  high.  They  did  not  lower  them  for  any  other 
reason.  Suppose  a  complaint  had  been  made  and  the  Commission 
had  .condemned  the  rate  and  lowered  it,  would  not  the  effect  have 
been  exactly  the  same  ? 

Senator  Kean.  Would  not  the  Commission  also  have  the  power 
to  raise  the  rate  if  they  condemned  the  rate  ? 

Mr.  FiFER.  I  am  glad  to  have  my  attention  called  to  that.  When 
it  comes  to  adjusting  rates  between  localities,  in  my  judgment  the 
poAver  sho\ild  be  given  to  the  Commission  to  lower  one  rate  and  to 
]-aise  another,  so  that  they  can  be  brought  to  where  they  are  just. 

Senator  Foraker.  That  is.  j^ou  think  thej^  should  have  the  right 
to  fix  a  minimum  as  well  as  a  maximum. 

Mr.  FiFER.  I  think,  generall3^  it  would  be  better  to  fix  a  maximum 
rate  and  give  elasticity  as  much  as  possible  to  the  rate.  Mr.  Hines 
had  much  to  say  about  elasticity — the  more  the  better.  He  wanted 
that  kind  of  elasticity,  I  suppose,  we  used  to  get  with  an  old  pair  of 
yarn  suspenders,  that  drew  up  and  let  out  as  occasion  required,  with 
a  few  buttonholes  in  front  for  extraordinary  occasions  when  there 
was  undue  expansion.  Now,  gentlemen,  look  at  that  a  moment. 
Expansion !  His  argument  there  proceeds  upon  the  theory  that  the 
Commission  was  to  make  the  rates  in  the  first  instance.     AVliy,  not 


192  REGULATION    OF    RAILWAY    RATES. 

at  all.  He  called  attention  to  these  very  experienced  men  running 
all  over  the  country  and  up  and  down  the  railroads  feeling  the  com- 
mercial pul^^e.  and  finding  out  just  what  ought  to  be  done.  Do  you 
suppose  that  if  this  power  was  in  the  Commission  these  men  would  be 
discharged  (  Thay  would  be  of  jiT^t  as  much  use  after  the  power  was 
granted  as  before,  and  they  would  nmke  the  same  rates  then  as  they  do 
to-day — just  exactly  the  same. 

Senator  Fokaker.  May  I  ask  jou,  before  you  get  too  far  away  from 
it,  whether  the  Interstate  Commerce  Commission  has  yet  decided  the 
question  raised  by  the  complaint  of  the  cattlemen? 

Mr.  FiFER.  No ;  that  is  to  be  argued  on  the  25th  of  ]May. 

Senator  Foraker.  How  long  since  that  complaint  was  filed  with  the 
Commission  ? 

Mr.  FiFEK.  I  do  not  know  exact h\  It  was  by  attorneys  hired  by  the 
cattlemen. 

Senator  Foraker.  It  was  three  or  four  years  ago? 

]Mr.  FiFER.  Xo. 

Senator  Foraker.  It  has  been  long  enough  ago  to  take  20,000  pages 
of  testimony. 

Mr.  FiFER.  Yes;  with  the  exhibits.  The  attorney  for  the  cattle 
raisers,  Mr.  Cowan,  I  believe,  is  here. 

]Mr.  Cowan.  The  case  was  begun  in  February  of  last  year  and  the 
evidence  was  concluded  in  December.  If  I  have  an  opportunity  of 
appearing  before  the  committee,  I  shall  refer  to  that. 

Mr.  FiFER.  Our  worthy  friends  have  not  only  complained  of  us 
because  we  have  not  made  good  citizens  out  of  them  by  injunction, 
but  they  have  also  complained  because  we  have  not  tried  these  civil 
cases  fast  enough. 

Senator  Foraker.  I  do  not  want  you  to  think  there  is  any  complaint 
involved  in  that  question  I  asked.  I  am  only  thinking  about  the 
feasibility,  and  using  3'our  own  case  as  an  illustration. 

jSIr.  FiFER.  Oh,  A'es.  "NMierever  there  has  been  these  long  delays, 
so  far  as  I  can  remember  now,  it  has  been  the  fault  of  the  attorneys 
themselves. 

Senator  Foraker.  Doubtless  not  the  fault  of  the  Commission.  We 
all  recognize  that. 

]\Ir.  Fifer.  Xo;  it  is  not.  I  do  not  know  an  anstance  where  the 
Commission  has  ever  continued  a  case  or  failed  to  go  to  a  place  and 
hear  it — some  one  of  us— whenever  the  parties  were  ready.  Now, 
you  take  the  Soap  Case ;  that  arose  from  your  own  State.  That  was 
represented  by  some  of  the  best  lawyers  from  Cincinnati  for  the  com- 
plainants, and  we  hurried  through  as  fast  as  we  could.  We  took 
great  volumes  of  testimony. 

Senator  Foraker.  I  have  not  heard  anybody  complain  of  the  Com- 
mission. 

Mr.  Fifer.  Mr.  Hines  cited  that  particular  case.  The  complain- 
ants are  not  here  complaining,  and  the  railroads  come  here  and.  in 
a  measure,  complain  that  there  has  been  too  much  delay.  I  believe 
Professor  Meyer — I  did  not  read  one  word  of  his  testimony — came 
here  all  the  way  from  Chicago  to  talk  about  the  Commission  in 
legard  to  that.  I  am  very  soriy  that  he  thought  it  was  necessary 
to  do  that.  There  are  many  kinds  of  professors  in  the  world — pro- 
fessors who  have  a  large  grasp  of  practical  affairs,  and  there  are 
professors  again  who  fall  within  that  class  described  by  Macaulay, 


REGULATION    OF    KAILWAY   RATES.  193 

laborious  pedants,  who  infest  large  libraries,  spending  most  of  their 
time  in  learning  the  wrong  thing.  I  do  not  know  to  what  class 
Professor  Meyer  belongs. 

Senator  Foraker.  Well,  Ave  have  had  two  professors  here. 

Mr.  FiFER.  That  is  one  more  than  I  had  heard  of. 

Senator  Foraker.  It  should  be  said  in  behalf  of  Professor  Meyer, 
now  that  you  speak  of  him  as  you  do,  that  he  came  here  on  the  invita- 
tion of  the  chairman  of  the  committee  and  without  any  compensation 
from  anybody,  and  refused  to  accept  even  his  expenses.  , 

Mr.  FiFER.  I  do  not  abuse  Professor  Meyer  at  all. 

Senator  Foraker.  It  was  purely  an  act  of  philanthropy  on  his  part. 

Mr.  Fifer.  I  am  very  glad  that  he  came.  For  one,  I  want  all  the 
light  on  this  subject  that  is  within  the  reach  of  the  committee. 

Senator  Newlands.  I  understand  that  the  complaint  of  the  rail- 
way men  is  not  regarding  the  delay  of  the  Commission  itself,  but  they 
assert  that  these  delays  are  an  inseparable  part  of  the  system ;  that  it 
is  impossible  for  the  Commission  to  act  with  the  rapidity  that  is 
desired,  the  rapidity  of  judgment  that  is  desired;  that  these  traffic 
men  with  their  numerous  assistants  are  watching  the  commercial 
conditions  all  the  time  and  are  able  to  act  quickly  and  decisively,  and 
that  it  is  important  for  the  commercial  interests  that  the  decisions 
should  be  quick  and  decisive.  It  is  the  system  that  they  object  to  as 
necessarily  involving  delay.  I  do  not  understand  that  they  complain 
of  the  Commissioners  themselves  in  that  regard. 

Mr.  Fifer.  Now,  gentlemen,  one  further  thought,  and  I  have  done. 
Our  eloquent  friend  from  Tennessee,  to  whom  I  have  before  referred, 
pictured  the  dangers  of  Government  ownership  by  granting  this 
power  to  the  Commission.  Now,  in  my  judgment  the  road  to  Govern- 
ment ownership  does  not  lie  in  that  direction  at  all.  It  does  not  lie  in 
that  direction  at  all  in  my  judgment,  but  the  reverse.  Government 
ownership  in  my  judgment  will  come,  if  it  ever  does  at  all — and  I  pray 
that  it  never  may — when  the  people  of  this  country  get  the  notion  into 
their  heads  that  these  railroad  corporations  are  too  strong  for  the  Inter- 
state Commerce  Commission,  are  too  strong  for  the  courts,  aye,  too 
strong  for  the  Government.  Now,  that  maj  come  sooner  than  we  think. 
We  have  heard  the  mutterings,  and  I  am  no  alarmist,  I  am  no  Jeffer- 
son man,  I  have  always  been  a  Hamilton  man,  and  I  am  no  alarmist. 
I  believe  this  Government  ultimately  will  take  care  of  itself,  and  is 
strong  enough  to  do  so,  but  we  have  heard  the  mutterings  in  the  great 
city  by  the  Lakes,  and  in  my  OAvn  town  of  25,000  inhabitants  there 
was  a  vote  upon  that  question  this  spring,  and  although  every  news- 
paper was  against  it,  yet  it  voted  for  municipal  ownership  of  public 
utilities  by  two  to  one. 

Senator  Foraker.  Still  you  would  do  what  is  right,  wouldn't  you  ? 

Mr.  Fifer.  Yes,  exactly;  and  let  the  consequences  take  care  of 
themselves.  The  railroads  are  cutting  out  their  very  sharp  curves, 
and  it  is  good  railroad  policy,  and  they  have  been  cutting  down  the 
heavy  grades.  Now,  instead  of  working  overtime  on  this  widow  and 
orjDhan  argument,  I  would  set  those  men  to  work  and  I  would  cut  out 
some  of  these  heavy  grades  in  these  tariffs  and  I  would  take  some  of 
these  sharp  curves  out. 

Senator  Kean.  That  is  what  they  are  doing — taking  the  grades  and 
curves  off. 

74lA— 05 13 


194  REGULATION    OF    RAILWAY    RATES. 

Mr.  FiFER.  Yes ;  that  is,  the  physical  curves,  but  I  would  take  them 
out  of  the  tariffs,  and  I  say  this  in  all  good  part  as  to  what  I  would  do 
if  I  were  a  railroad  man.  As  long  as  these  situations  exist  over  the 
country,  it  is  like  a  thorn  in  the  foot;  it  will  never  down  until  the 
thorn  is  removed.  It  is  a  festering  sore,  and  I  believe — I  am  hope- 
ful— I  believe  that  the  time  will  come  when  this  everlasting  conflict 
that  is  going  on  between  the  railroads  on  the  one  side  and  the  people 
on  the  other  will  stop.  I  believe  that  it  will  find  repose  in  just  laws 
justly  administered,  and  when  that  is  done  there  will  be  a  better 
understanding.  I  believe  that  we  are  passing  through,  and  have  been, 
a  transition  period  in  this  country  so  far  as  railroads  are  concerned. 
I  think  we  are  a  little  different  from  what  they  are  in  Europe. 

We  are  running  a  foot  race  to  get  on  in  the  world  and  get  the  dol- 
lar, and  each  railroad  man  wants  to  be  the  biggest  railroad  man.  I 
think  that  we  will  pass  through  that  by  and  by  and  the  railroads  will 
settle  down  to  where  there  will  be  less  antagonism.  I  admire  wonder- 
full}^  Mr.  James  J.  Hill.  I  admire  INIr.  Cassatt,  and  I  admire  Mr. 
Fish,  of  the  Illinois  Central.  They  are  all  in  a  measure  benefactors. 
If  I  had  their  money,  I  would  not  invest  it  in  boring  holes  through  the 
Kocky  JMountains;  I  would  go  off'  to  Europe,  I  think,  and  have  a  good 
time — quit  business ;  but  they  have  the  pluck  and  the  nerve  to  develop 
these  great  industries.  They  do  not  do  it  for  charity;  they  want  to 
measure  their  prowess  and  their  genius  with  the  genius  and  ability  of 
others,  and  they  become  great  benefactors.  There  is  Mr.  Fish,  who 
look  various  roads  throughout  the  South.  He  galvanized  them  and 
breathed  the  breath  of  life  into  them,  and  has  made  a  great  railroad 
system,  and  so  has  Mr.  Hill.  When  he  went  to  the  Pacific  coast  he 
might  have  lost  ever}^  cent  he  put  into  it.  I  would  have  said  so.  I 
would  not  have  done  it.  I  say.  All  hail  to  these  men  !  and  I  would  not 
lay  a  straw  in  their  way.  I  say  they  are  benefactors,  and  I  know  of 
nobody  who  is  doing  more  for  this  country  than  these  great  captains 
of  industry,  the  railroad  men,  but  they  should  not  impose  on  the 
public. 

I  have  often  thought  that  I  would  rather  be  a  railroad  president 
than  to  hold  any  other  position  on  eaVth.  Senator  CuUom  will  per- 
haps remember  that  in  our  town  some  years  ago  Bishop  Spaulding, 
of  Peoria,  came  over  there  and  delivered  a  wonderfully  brilliant 
and  eloquent  lecture.  We  have  a  sort  of  an  eccentric  in  our  town  who 
imagined  that  he  was  something  of  a  litterateur.  He  went  out  to 
hear  the  Bishop,  and  in  going  away  with  a  friend  he  said :  "  Do  you 
know  if  I  had  my  life  to  live  over  again  I  would  be  a  bishop  ?  "  Now, 
gentlemen,  if  I  had  my  life  to  live  over  again  I  would  be  president  of 
some  great  railroad  company.  I  have  a  great  admiration  for  them. 
They  have  done  wonders  for  this  country.  The  railroads  should  be 
fairly  treated,  and  I  am  willing  to  concede  that  much  of  this  talk  is 
unfounded  and  unjust.  We  must  view  these  questions  not  as  partisans, 
not  as  railroad  wreckers,  but  as  fair  men  looking  on  both  sides  of  the 
question,  and  that  I  believe  I  am  able  to  do;  but  in  order  to  allay 
this  constant  friction  that  has  been  going  on  for  years  and  which  is 
increasing,  there  must  come  about  in  some  way  a  better  under- 
standing between  the  people  on  the  one  side  and  the  railroads  on  the 
other,  and  that  can  be  done  by  fair  dealing. 

Senator  Foraker.  Do  you  think  this  friction  is  increasing  ? 


REGUIATION    OF    RAILWAY   RATES.  195 

Mr.  FiFER.  Well,  I  don't  know  whether  it  is  or  not,  but  I  think  it  is 
at  this  time. 

Senator  Foraker.  Is  it  not  true  that  there  is  less  friction  to-day 
between  the  shippers  and  the  public  and  the  railroads  than  ever 
before  in  the  history  of  railroads  in  this  country  ? 

Mr.  FiFER.  I  hope  that  is  true;  and  possibly,  Senator,  you  may  be 
right  about  it. 

Senator  Foraker.  I  ask  to  get  your  opinion. 

Mr.  FiFER.  It  is  not  being  allayed  very  fast.  It  is  not  disappearing 
very  rapidly,  and  it  is  still,  I  might  say,  a  diabolical  fact.  It  is 
Avith  us. 

Senator  Kean.  Won't  it  always  be  with  you  ? 

Mr.  Fieer.  No;  I  think  not.  I  think  it  will  come  about  as  it  is  in 
Europe  to-day.  I  have  not  had  time  to  read  it,  but  I  understand  that 
the  people  over  there  have  no  such  feeling  against  the  railroads  as 
they  have  here.  You  can  take  a  personal-injury  case  before  a  jury 
and  get  just  as  fair  a  trial  as  you  can  where  the  controversy  is  be- 
tween two  individuals.  That  kind  of  feeling  to  which  I  refer  does 
not  exist  at  all.  I  think,  possibly,  it  is  because  there  is  some  sort  of 
regulation,  and  the  railroads  have  acquiesced,  and  for  that  reason  it 
has  largely  disappeared.  That  is  my  own  opinion. 
■  Senator  Foraker.  Do  you  think  "^the  railroads  have  an  advantage 
before  American  juries  in  personal-injury  cases? 

Mr.  FiFER.  Not  at  all. 

Senator  Foraker.  Just  the  reverse,  is  it  not? 

Mr.  Fifer.  To  some  extent.  I  have  tried  that  question  to  my  sor- 
row many,  many  times.     And  I  think  that  is  the  general  experience. 

Now,  gentlemen,  that  is  my  say.  I  have  given  you  the  experience 
of  one  who  has  had  only  a  few  years  on  the  Commission.  I  may  be 
mistaken.     I  think  in  the  main  I  am  correct. 

Senator  Foraker.  You  told  us  of  two  instances  in  which  you 
thought  excessive  rates  were  charged,  both  to  intermediate  points, 
one  to  Salt  Lake  City  and  the  other  to  Charlotte.  Now,  what  would 
you  do  in  those  cases  if  we  were  to  give  you  the  power?  I  would 
like  to  see  how  these  things  would  work. 

Mr.  Fifer.  As  far  as  the  Charlotte  case  is  concerned,  I  would  not 
like  to  discuss  that  further.  I  have  told  the  circumstances,  which 
now  are  public  record.  We  have  to  pass  on  that  question  soon.  In 
ttie  other  I  do  not  know.  The  Rocky  Mountain  or  western  mountain 
situation  must  all  be  tried  together.  It  is  a  large  question;  you 
can  not  single  out  any  railroad  running  to  any  Pacific  coast  terminal 
and  try  that  case.  What  affects  one  affects  all  the  transcontinental 
roads,  and  it  would  be  very  unfair  to  try  one  situation  without  bring- 
ing them  all  in. 

Senator  Foraker.  Well,  I  did  not  want  to  have  you  testify  any 
further  about  that  matter.  Inasmuch  as  you  cited  those  situations 
I  thought  you  had  something  clearly  in  your  mind  as  to  what  you 
would  do  to  remedy  those  troubles. 

Mr.  Fifer.  Now,  we  have  been  talking  about  investigating  that 
whole  western  mountain  situation.  Bring  in  all  the  roads  and  let 
them  all  be  heard. 

Senator  Foraker.  You  do  know  that  you  would  not  raise  the  rate, 
as  I  understand  you,  on  the  through  haul  to  the  Pacific  coast? 

Mr.  Fifer.  No,  sir. 


196  KEGULATION    OF   RAILWAY   RATES. 

Senator  Foeaker.  You  would  have  to  leave  that  as  it  is  or  else 
drive  the  railroads  out  of  that  business? 

Mr.  FiFER.  Yes ;  that  is  right. 

Senator  Foraker.  Then  you  would  have  to  reduce  the  rate  to  Salt 
Lake  City? 

Mr.  FiFER.  That  would  appear  to  be  true. 

Senator  For^vker.  If  you  were  to  set  out  to  do  that,  you  would 
have  to  determine  upon  the  facts  adduced  whether  or  not  that  was  an 
unreasonable  rate  under  all  the  circumstances? 

Mr.  Fifer.  Under  the  first  section,  but  not  under  the  fourth. 

Senator  Foraker.  If  it  was  reasonable,  it  would  stand. 

Mr.  Fifer.  Yes;  that  is  the  situation  exactly. 

Senator  Foraker.  If  we  have  any  remedy  for  that,  you  are  not 
aware  of  it,  as  I  understand  ? 

Mr.  Fifer.  I  want  to  add  in  closing  that  I  do  not  believe,  except 
in  som*}  instances  Avhere  I  have  stated,  that  the  railroad  rates  through- 
out this  country  are  excessively  high  at  all.  I  have  never  believed 
that,  and  neither  do  I  believe  there  would  be  or  ought  to  be  any  great 
disturbance  of  these  rates,  whatever  powers  the  Commission  might 
be  invested  with. 

Senator  Foraker.  As  a  matter  of  fact,  it  is  true,  is  it  not.  that 
rates  b3^  themselves,  rates  in  the  absolute  are  not  unreasonably  high? 

Mr.  Fifer.  I  believe  that  is  true  with  some  exceptions. 

Senator  Foraker.  There  may  be  some  exceptions,  of  course,  to  the 
rule? 

Mr.  Fifer.  Yes ;  I  think  so. 

Senator  Foraker.  And  if  there  is  not  any  remedy  against  that,  that 
is  adequate,  one  should  be  provided,  I  suppose,  would  be  your 
opinion  ? 

Mr.  Fifer.  Yes. 

Senator  Foraker.  That  disposes  of  the  rate  question.  Then  as  to 
the  rebates,  you  state,  as  I  understand  you,  that  they  are  practically 
discontinued,  and,  if  not,  there  is  all  the  law  you  can  think  of  neces- 
sar}^  to  enforce  the  discontinuance  of  them. 

Mr.  Fifer.  I  can  not  think  of  anything  else.  However,  I  would 
say  this :  This  escaped  me  when  we  were  on  that  subject  before.  If 
you  would  delegate  some  power  to  the  Commission  to  have  a  skilled 
accountant  to  examine  the  books,  I  thinli  that  that  would  be  a  very 
material  help. 

Senator  Foraker.  Have  a  sort  of  power  of  visitation? 

Mr.  Fifer.  A  power  of  visitation;  that  is,  by  an  expert.  I  could 
not,  nor  could  you,  go  into  those  books  and  find  out  anything  about 
them  in  the  rest  of  my  lifetime. 

Senator  Foraker.  Something  like  a  bank  examiner? 

Mr.  Fifer.  We  must  have  somebody  of  skill.  There  is  one  thing 
further  that  I  think  the  committee  ought  to  consider,  and  that  is  in 
regard  to  export  rates.  Mr.  Hill  came  here,  I  am  very  sorry  to  un- 
derstand, and  abused  the  Commission,  and  said  in  substance  that  the 
action  of  the  Commission  had  prevented  him  from  sending  flour  to 
the  Orient. 

Senator  Foraker.  I  do  not  think  Mr.  Hill  abused  the  Commission, 
if  you  will  allow  me  to  interrupt  you  there.  He  simply  said  the  Com- 
mission required,  in  accordance  with  the  provisions  of  the  law,  that 
he  should  publish  his  rates. 


EEGULATION    OF    EAILWAY    BATES.  197 

Mr.  FiFER.  No;  I  will  tell  you  about  that.  I  do  not  think  that 
Mr.  Hill  has  ever  been  trammeled  in  his  export  rates  in  the  slightest 
particular  by  an}'-  action  of  the  Commission.  I  think  that  the  law  is 
as  the  Commission  has  decided,  that  those  rates  must  be  published 
along  with  the  other  schedules.  I  have  always  been  in  favor  of  an 
emergency  tariff  on  export  rates — for  instance,  a  great  deal  of  these 
sales  to  the  Orient  are  made  by  cable.  They  telegraph  to  Chicago 
or  to  Pittsburg  for  steel  goods  or  for  canned  goods,  and  they  have  also 
the  bid  from  some  place  in  Europe  where  they  have  water  com- 
munication, and  the  man  here  can  fill  the  order  if  he  can  get  a  reason- 
able internal  rail  rate.  If  he  publishes  his  schedules,  he  can  not 
change  his  schedules  in  time  to  take  the  order,  and  therefore  he  will 
lose  it. 

Now,  it  is  not  discrimination  against  th(?  American  producer,  or 
not  much  at  least,  to  have  an  elastic  export  tariff  that  can  be  done 
away  with  in  special  emergencies,  because  it  is  a  question  whether  the 
American  producer  shall  fill  a  foreign  order  or  whether  he  shall  not. 
Now,  we  called  all  the  railroads  together  and  the  shippers,  something 
over  a  year  ago,  and  he«,rd  all  of  their  complaints.  Some  of  the 
roads  were  in  favor  of  publishing  the  export  tariff  and  others  were 
not,  and  some  of  the  shippers  were  and  others  were  not;  but  we  de- 
cided that  the  law  was  that  it  must  be  published,  and  said  that  we 
would  not  enforce  it,  however,  until  the  railroads  had  had  an  oppor- 
tunity to  lay  the  whole  matter  before  Congress  and  get  relief.  I 
think,  gentlemen,  you  ought  to  give  us  some  legislation  on  that  ques- 
tion. 

Senator  Fokaker.  Under  the  law  as  it  now  stands  the  Commission 
has  the  power  to  waive  that  requirement  about  the  publication  of 
through  rates  on  export  business,  I  believe,  has  it  not? 

Mr.  FiFER.  Oh,  I  think  not.  Now,  if  the  committee  will  indulge 
me,  before  I  answer  any  questions  which  they  may  desire  to  put  to  me, 
I  would  like  to  crystallize  all  these  things  that  I  have  been  saying 
into  some  concrete,  definite  form.  First,  I  stand  with  the  President 
in  regard  to  granting  power  to  the  Interstate  Commerce  Commission 
to  fix  what  a  reasonable  rate  should  be  after  an  investigation. 

Senator  Doixiver.  Now,  do  you  apply  that  to  the  question  of  rates 
that  are  unreasonable  in  themselves  or  do  you  apply  it  also  to  these 
discriminations  ? 

Mr.  FiFER.  I  do  not  see  why  it  should  not  be  applied  to  discrimi- 
nations between  localities.  As  I  said  earlier  in  my  statement,  I  do 
not  see  if  there  is  a  discrimination  such  as  there  was  in  what  we  called 
the  "  Wichita  case  "^ — that  is,  they  charged  from  St.  Louis  to  Wichita 
a  higher  rate  for  a  shorter  haul  over  the  lines  of  the  same  company 
than  they  did  to  Omaha,  a  longer  distance.  I  do  not  know  how  you 
are  going  to  correct  that  inequality  unless  you  lay  your  hands  on  the 
rates.  I  believe  that  when  you  determine  that  a  rate  is  unreason- 
able when  it  is  charged,  and  you  hear  all  the  evidence  and  the  argu- 
ments, when  you  find  that  the  rate  is  too  high,  somehow  in  some  way 
by  the  same  mental  operation  you  find  what  a  reasonable  rate 
should  be. 

Senator  Kean.  If  you  find  that  it  is  too  low,  what  would  you  do? 

Mr.  FiFER.  Well,  that  would  hardly  ever  be  the  case,  and  the  sole 
question  is  as  to  whether  or  not  the  rate  is  reasonable.  I  think 
we  can  rely  upon  our  railroad  friends  to  fix  their  rates  high  enough. 


198  REGULATION   OF  RAILWAY  RATES. 

I  do  not  think  that  we  need  trouble  ourselves  about  that.  They  will 
take  care  of  that. 

Senator  Iveax.  Do  you  think  a  7-cent  rate  on  grain  to  New  York 
was  too  low  ? 

]Mr.  FiFER.  Decidedly  too  low.  It  was  a  ruinous  rate.  Perhaps  it 
might  pay  operating  expenses,  and  yet  I  doubt  that.  Certainly, 
every  road  in  the  United  States,  if  all  their  rates  were  fixed  at  that 
standard,  would  be  in  chancer}^ 

Senator  I^an.  Suppose  that  New  York  was  complaining  as 
against  New  Orleans,  that  thej'^  had  too  low  a  rate,  how  would  you 
arrange  that? 

Mr.  FiFER.  That  is  over  different  lines.  This  discrimination  be- 
tween localities  is  generally  over  a  single  line.  We  have  that  trouble 
in  regard  to  the  import  rates,  of  which  you  heard  from  Judge 
Clements  on  the  rate  from  Antwerp  on  jDlate  glass  to  Chicago.  The 
rate  is  40  cents,  whereas  from  Boston  it  is  50  cents.  The  Gulf  ports 
wanted  to  participate  in  that  traffic  from  Antwerp.  The  vessels 
that  go  to  the  Gulf  ports  are  largely  tramp  vessels  going  around  the 
world.  The}'  are  not  regular  lines  of  steataers,  and  they  bring  but 
little  import  traffic  and  frequently  it  happens  that  wheat  is  carried 
over  and  back  across  the  ocean  several  times,  simph^  for  ballast.  It 
is  frequently  the  case  that  these  vessels  pay  a  certain  amount  for  sand, 
as  ballast,  if  they  have  not  freight  enough  to  put  in  the  holds  of 
their  ships. 

Those  vessels  that  serve  the  Gulf  ports  might  bring  that  glass  for 
ballast,  and,  therefore,  could  bring  it  for  nothing.  Mr.  Fish  wanted 
to  participate  in  that  traffic,  and  he  made  a  rate  of  32  cents.  He  had 
a  right  to  do  so.  I  do  not  know  that  we  ought  ever  to  say  that  he 
should  not.  That  is  the  competition  between  markets,  and  that  is  the 
great  regulator  of  rates  in  this  countr3^  For  instance,  the  man  from 
the  North  Atlantic  seaboard  meets  a  man  from  the  Gulf  in  the  grain 
markets  of  Kansas  City,  say,  and  they  begin  to  bid  against  each  other 
for  grain,  and  what  they  can  bid  depends  upon  the  rail  rate  so  that 
brings  these  railroads  into  competition  with  each  other.  Now,  strange 
to  say,  the  ^Mississippi  Kiver  from  the  grain  fields  of  the  West  to  the 
(julf  regulates  the  grain  rates  to  the  East  over  these  freight  lines. 
That  seems  strange,  and  how  is  it  brought  about?  Mr.  Fish's  road 
parallels  the  Mississippi  from  Cairo  to  New  Orleans.  Now,  he  "must 
make  a  rate  that  will  take  that  traffic  from  the  water  and  put  it 
uj^on  the  rails,  and  the  man  from  New  Orleans  meets  a  man  in  Kan- 
sas Cit}^  or  St.  Louis  to  purchase  grain.  There  is  a  water  rate 
that  is  fixed  by  the  Mississippi  Kiver  to  tide  water.  The  Mississippi 
River  fixes  it.  It  also  fixes  the  rate  for  the  Atlantic  seaboard.  If 
the  Atlantic  seaboard  wants  to  get  that  grain,  the}^  must  give  a  rate 
that  is  substantially  the  rate  fixed  b}'^  Mr.  Fish.  So  there  you  have 
what  is  called  on  wide  fields  a  competition  between  markets.  As  I 
said.  I  do  not  believe  that  granting  that  power  to  the  Commission 
would  upturn  these  rates  as  much  as  our  railroad  friends  imagine 
that  it  would,  and  I  doubt  if  we  would  ever  be  called  upon  to  exercise 
the  authority  that  would  be  delegated  very  often,  because  simply 
the  fact  that  the  power  exists  would  cause  these  men  when  they  met 
in  conference  as  they  do,  to  not  go  so  fast.  It  would  be  a  restraining 
force.    Thev  would  sav  we  had  better  go  slow  about  this,  we  had  better 


KEGULATION    OF    RAILWAY   RATES.  199 

use  moderation ;  if  we  do  not  and  fix  these  rates  too  high  the  Commis- 
sion will  be  after  us  and  we  will  have  trouble. 

It  is  said,  however,  by  Mr.  Hines  that  the  courts  would  never  dis- 
turb a  rate  fixed  by  the  Commission  unless  it  was  confiscatory:  that 
they  could  not  do  so.  I  do  not  think  that  is  true  if  you  simply  dele- 
gate that  power,  but  suppose  you  insert  a  little  provision  in  the  law 
saying  that  the  courts  when  applied  to  should,  on  the  evidence  pre- 
sented, have  a  right  to  pass  upon  that  question  of  fact,  just  the  same 
as  the  Commission.  I  think  they  would  do  so  anyhow,  but  suppose 
you  did  that;  it  would  obviate  all  the  objections  urged  by  Mr.  Hines, 
and  his  argument  goes  to  the  ground. 

Now,  then,  further,  I  wouFd  talve  away  from  the  Commission  this 
executive  power.  The  railroads  complain,  and  I  think  justly,  that 
they  do  not  like  to  go  into  a  police  headquarters  and  try  their  civil 
rights,  and  I  think  that  power  should  be  taken  away  from  the  Com- 
mission and  conferred  upon  some  other  tribunal.  I  think  if  this 
remains  with  the  Commission  or  you  create  another  commission  for 
that  purpose  you  should  delegate  to  that  body  or  this  body,  if  we  con- 
tinue to  exercise  that  power,  the  right  of  investigation  by  skilled  ex- 
perts. I  believe  that  was  suggested  by  Mr.  Hines,  and  I  think  there 
would  be  no  trouble  about  that,  because  I  believe  that  these  railroads 
want  to  stop  these  rebates  as  much  as  thej^  can.  It  is  natural  to  sup- 
pose that  they  should,  and  I  think  that  that  would  be  a  great  aid  in 
preventing  these  rebates  for  the  future. 

I  believe  there  are  rebates  paid  now,  and  possibly  there  will  be  as 
long  as  there  are  railroads.  You  can  not  stop  all  crime,  I  do  not 
care  what  law  you  have.  There  is  not  a  cit}^,  there  is  not  a  town,  or 
a  village  throughout  the  length  and  breadth  of  this  land  where  the 
law  is  not  violated  in  some  way  every  twenty-four  hours.  You  can 
drive  it  to  cover,  you  can  restrain  it,  you  can  minimize  it,  but  you 
can  not  wholly  prevent  it.  and  so  with  the  exercise  of  this  power. 

Now,  I  would  provide  for  a  court.  I  would  provide  for  a  court,  and 
it  seems  to  me  that  the  better  plan  would  be  to  restrict  the  jurisdic- 
tion ©"f  that  court  exclusively  to  the  trial  of  these  cases,  although  I 
am  not  clear  in  regard  to  that  proposition.  You  might  make  some 
such  provision  as  the  Esch-Townsend  bill  contained  and  adopt  it. 

Senator  Cullom.  Well,  you  say  you  would  provide  for  a  court. 
Do  you  mean  that  that  court  should  simply  listen  to  and  try  cases 
sent  to  it  by  the  Commission,  or  after  the  Commission  had  made  a 
finding  ? 

Mr.  FiFER.  Yes,  I  think  so.  You  might  delegate  to  that  court  the 
powers  that  are  exercised  by  the  courts  now,  the  power  of  injunction. 
We  have  some  fourteen  railroads  tied  up  already  by  injunction,  and 
you  might  confer' upon  that  court  that  power.  That  might  be  a  good 
thing ;  and  in  regard  to  export  rates  I  think  there  ought  to  be  some 
amendment  of  the  law  and  rigid  regulation  in  regard  to  import  rates; 
but  so  far  as  export  rates  are  concerned,  I  think  the  widest  latitude 
ought  to  be  permitted,  perhaps  to  have  some  tariff,  but  to  provide  also 
for  what  might  be  called  an  emergency  tariff,  so  that  it  could  be 
changed  quickly,  and  when  our  manufacturers  and  producers  received 
a  cable  for  a  large  order  of  goods  and  the  same  purchaser  had  a  bid 
from  perhaps  some  of  the  countries  of  Europe  for  the  same  order, 
there  ought  to  be  some  arrangement  made  for  an  emergency  tariff. 
I  think  it  would  help  very  greatly.     I  did  not  read  Mr.  Hill's  testi- 


200  EEGULATIOX    OF    RAILWAY   KATES. 

mony,  but  I  have  no  doubt  from  the  expressions  that  I  have  heard 
from  raih'oad  men  that  that  would  be  a  most  excellent  provision. 
Now,  I  do  not  know  what  other  amendments  you  could  make  to  this 
law. 

Senator  Cullom.  If  I  understand  you,  you  propose  that  the  law 
should  be  amended  so  that  you  not  only  on  complaints  could  determine 
whether  a  rate  was  reasonable,  but  if  you  found  it  to  be  unreasonable 
you  could  determine  what  rate  Avould  be  reasonable? 

Mr,  FiFER.  AA^iat  rate  would  be  reasonable. 

Senator  Culloai.  And  to  make  an  order  accordingly? 

Mr.  FiFER.  Yes. 

Senator  Keax.  Whether  a  higher  or  lower  rate. 

Mr.  FiFER.  Well,  as  I  said  a  moment  ago,  I  think  the  railroad 
traffic  men  will  take  care  of  the  maximum. 

Senator  Keax.  That  is  not  the  question.  You  are  going  to  decide 
a  complaint  that  is  made,  and  you  are  to  decide  whether  that  rate  is 
reasonable  or  unreasonable. 

Mr,  FiFER.  AATio  would  bring  a  complaint  of  that  kind  ?  Certainly 
not  the  shipper:  and  the  railroad  would  not  bring  it,  because  the 
railroad  has  the  right  to  make  it  in  advance. 

Senator  Kean.  But  you  have  to  decide  whether  this  thing  is  fair 
or  not. 

Senator  Foraker.  Suppose  you  have  two  localities,  on  different 
lines,  and  complaint  is  made  that  one  locality  has  a  rate  that  is  dis- 
criminatory as  against  it  as  compared  with  the  other,  and  suppose 
the  defense  Avould  be  by  that  road  that  that  is  only  a  reasonable  rate 
and  you  would  find  it  reasonable,  vou  would  have  to  find  the  other 
was  unreasonably  low  ? 

Mr.  FiFER.  Then  you  would  destroy  the  competition  of  markets. 
That  would  be  the  danger  about  that. 

Senator  Foraker,  And  that  would  not  be  a  good  thing  to  do? 

Mr,  FiFER,  I  think  it  would  not. 

Senator  Foraker,  This  rivalry  between  localities  is  one  of  the  best 
kinds  of  competition  that  we  have,  is  it  not? 

Mr,  Fifer,  Oh.  most  certainly. 

Senator  Foraker,  And  you  would  not  believe  in  giving  to  the 
Commission  the  right  to  fix  a  minimum  rate  below  which  one  locality 
in  the  case  heard  might  not  go? 

Mr,  Fifer.  I  doubt  the  propriety  of  that  for  the  reasons  I  stated, 
that  it  would  tend  to  destroy  the  competition  between  markets,  which 
is  certainl}^  a  great  regulator  of  rates. 

Senator  Foraker.  If  you  found  one  rate  was  unreasonably  high 
and  you  were  to  require  it  to  be  reduced,  and  it  were  reduced,  the 
same  discrimination  could  be  practiced  by  dropping  the  other  rate 
so  as  to  keep  the  difference? 

Mr,  Fifer.  That  could  be  done,  yes,  sir.  I  do  not  believe,  however, 
that  the  railroads  themselves  would  ever  consent  to  that. 

Senator  Foraker.  And  you  do  not  think  it  would  be  a  good  thing 
for  i;he  country,  do  you  ? 

Mr.  Fifer,  I  do  not.  You  take  the  great  Mississippi  Valley.  The 
traffic  is  going  to  the  Gulf.  That  is  the  natural  outlet,  and  they 
would  not  want  to  have  their  natural  rights  and  advantages  taken 
away. 

Senator  Foraker.  Now,  ii  you  take  awaj-  from  this  subject  the 


REGULATION    OF    RAILWAY   RATES.  201 

question  of  rates  as  j^ou  take  awav  the  question  of  rebates  and  dis- 
crimination between  localities,  what  is  there  left  except  discrimina- 
tion in  commodities  and  private  car  lines  and  terminal  charges  for  us 
to  consider? 

Mr.  FiFER.  Well,  that  is  about  all. 
■  Senator  Fokaker.  It  comes  down  to  within  pretty  narrow  limits? 

Mr.  FiFER.  Yes. 

Senator  Xewlands.  There  is  more  complaint  about  discrimination 
between  localities  than  any  other,  is  there  not? 

Mr.  FiFER.  Yes;  there  is  a  great  deal  of  complaint  in  regard  to 
that,  and  that  is  one  of  the  most  difficult  questions  we  have  to  deal 
with. 

Senator  Foraker.  If  you  grant  a  complaint  in  a  given  case  the 
other  locality  is  likely  to  complain  as  against  that  which  has  been 
remedied  ? 

Mr.  Fifer.  Yes;  and  that  is  liable  to  force  on  a  rate  war.  You 
take  the  competition  between  the  North  Atlantic  seaboard  and  the 
Gulf  ports  in  the  grain  trade.  Out  in  our  country  last  fall,  or  in 
the  early  winter,  there  was  something  of  a  rate  war.  The  Gulf 
roads  were  carrying  grain  very  low.  They  could  not  get  above  the 
Mississippi  River  rates,  which  will  always  fix  the  rate.  The  mo- 
ment they  put  the  rate  up  high  the  traffic  goes  by  water.  So  that 
in  determining  rates  j^ou  can  always  get  a  case  of  that  kind  and  by 
that  standard  you  can  measure  rates,  so  that  you  can  not  get  very  far 
out  of  the  way. 

Senator  Foraker.  What  is  the  differential  now  between  Boston 
and  New  York  in  favor  of  New  Orleans? 

Mr.  Fifer.  On  grain? 

Senator  Foraker.  Yes.  • 

Mr.  Fifer.  I  could  not  tell  you  just  what  it  is  now.  They  say 
that  it  takes,  I  think,  about  three  quarters  of  a  cent  to  a  cent  to  divert 
the  grain  traffic  from  the  Northwest  to  the  Gulf,  because  there  are 
some  natural  disadvantages  at  the  Gulf— the  warm  weather — and  it 
is  preferable  to  ship  the  grain  out  from  a  port  farther  north.  So 
that  the  Gulf  ports  in  regard  to  grain  and  grain  products  labor  under 
that  natural  disadvantage. 

Senator  Foraker.  The  New  Orleans  and  Galveston  ports  were  not 
involved  in  this  investigation  the  Interstate  Commerce  Commission 
has  just  made  with  reference  to  the  differentials  applying  to  Phila- 
delphia and  Brooklyn? 

Mr.  Fifer.  No;  they  did  not  participate  in  that  investigation  at 
all,  yet  the  witnesses  reached  out  and  they  came  in  incidentally.  But 
in  the  plate  glass,  this  import  case,  they  took  leave  to  bring  in  the 
Illinois  Central  Railroad,  and  there  is  to  be  a  further  inquiry,  as  I 
remember,  in  regard  to  that. 

Senator  Foraker.  There  is  a  differential  in  favor  of  New  Orleans 
as  against  New  York  of  something  like  T  cents,  is  there  not  ? 

Mr.  Fifer.  On  grain? 

Senator  Foraker.  Yes. 

Mr.  Fifer.  A  hundred  ? 

Sentitor  Foraker.  Yes. 

Mr.  Fifer.  Oh,  I  think  not  so  high. 

Senator  Foraker.  What  is  the  differential  in  favor  of  Baltimore 
as  a  port  ? 


202  REGULATION    OF    RAILWAY    RATES. 

Mr.  FiFER.  AA'ell,  we  fixed  that,  but  I  am  not  prepared  on  those  fig- 
ures. At  Baltimore  it  is  a  little  more  than  it  is  at  Philadelphia;  I 
think  about  2  cents  at  Baltimore  as  against  New  York  and  Boston. 
New  York  and  Boston  take  the  same  rate. 

Senator  Keax.  Boston  is  not  very  well  satisfied? 

Mr.  FiFER.  No. 

Senator  Forakek.  New  York  and  Boston  have  the  same  rate  for 
exports.  They  have  not  the  same  rate,  however,  for  domestic  trans- 
portation, have  they?  Is  not  the  rate  from  Chicago  to  Boston  2 
cents  per  hundredweight  higher  than  from  Chicago  to  New  York  ? 

Mr.  FiFER.  On  exports? 

Senator  Foraker.  No ;  on  domestic. 

Mr.  FiFER.  It  is  somewhat  higher;  but  just  the  rate  I  could  not 
tell  you. 

Senator  Forakek.  But  the  rate  for  export  is  the  same  from  Chi- 
cago to  Boston  as  from  Chicago  to  New  York? 

Mr.  FiFER.  Yes;  but  a  little  less  at  Philadelphia  and  a  little  less 
at  Baltimore  than  at  Philadelphia. 

Mr.  Commissioner  Knapp.  May  I  be  pardoned  if  I  endeavor  to 
answer  that  question  ? 

Senator  Foraker.  I  would  be  very  much  obliged  if  you  would. 

Mr.  Commissioner  Kxapp.  One  of  the  earliest  (Questions  that  came 
before  the  Commission  was  the  proper  adjustment  of  rates  from  the 
West  as  between  New  York  and  Boston.  They  had  been  very  much 
higher  to  Boston.  The  Commission  heard  that  case  before  I  became 
a  member  of  it,  and  decided  that  the  domestic  rate  to  Boston  should 
exceed  the  rate  to  New  York  by  one-tenth  of  the  New  York  rate — 
that  is,  to  be  10  per  cent  above.  Carriers  substantially  complied 
with  that  determination,  not  by  fixing  the  positive  rate  of  10  per  cent 
above,  but  by  making  changes  in  the  figures,  which  was  substantially 
10  per  cent,  so  that  now,  I  think,  the  difference  ranges  from  2  cents 
on  the  lowest  class  up  to  perhaps  8  cents  in  the  first  class,  and  pos- 
sibly even  more  than  that. 

Senator  Foraker.  Assuming  it  is  2  cents  higher  to  the  Boston 
port  for  domestic  consumption  than  it  is  to  New  York,  and  the  same 
for  export  from  Chicago  to  Boston  and  Chicago  to  New  York  ports, 
what  would  be  the  effect  of  making  the  rate  for  exports  from  Chicago 
to  Boston  the  same  that  it  is  for  consumption  ?  In  other  words,  not 
giving  Boston  a  differential  for  export  as  against  her  domestic  rate? 

Mr.  Commissioner  Kxapp.  Why,  I  should  think  if  the  inland  ex- 
port rate  to  Boston  were  higher  than  to  New  York — materially 
higher;    say,  2  cents — it  would  practically  close  up  the  Boston  port. 

Senator  Cuelo?<i.  What  is  the  differential  between  New  York  and 
New  Orleans? 

Senator  Foraker.  I  want  to  ask  another  question,  if  I  may  be  per- 
mitted. On  what  basis  do  you  make  a  lower  rate  for  export  from 
Chicago  to  Boston  than  you  do  for  domestic  transportation  for  con- 
sumption ? 

Mr.  Commissioner  Knapp.  Upon  the  theor}'-  that  the  through  rate 
from  origin  to  foreign  destination  must  be  at  least  as  low  through 
Boston  as  through  New  York  to  enable  it  to  get  any  of  that  business. 

Senator  Foraker.  Otherwise  it  would  all  go  out  through  the  other 
port  ? 

Mr.  Commissioner  Knapp.  Yes. 


REGULATION    OF   RAILWAY   RATES.  203 

Senator  Foraker.  That  is,  a  difference  of  2  cents  a  hundredweight 
from  Chicago  to  a  seaboard  in  favor  of  the  one  port  would  take  all  out 
of  that  port  as  against  the  other? 

Mr.  FiFER.  Yes;  where  the  difference  in  ocean  rate  is  so  slight  as 
between  Xew  York  and  Boston. 

Senator  Foraker.  So  that  it  is  not  a  question  of  mere  natural  con- 
ditions existing  at  Boston  and  New  York,  is  it  ? 

Mr.  Fifer.  Scarcely  at  all. 

Senator  Foraker.  It  has  not  an3^thing  to  do  with  it?  It  is  a  di- 
rect preference,  is  it  not  ?  What  else  is  it  that  leads  the  Commission 
to  say  that  Boston  may  have  2  cents  less  for  exports  than  she  has  for 
domestic  importation? 

Mr.  Fjfer.  Broadly  put,  to  permit  Boston  to  participate  in  that 
exj)ort  trade. 

Senator  Foraker.  Something  she  would  not  be  allowed  to  do  if  the 
other  rate  prevailed? 

Mr.  Commissioner  Knapp.  And  on  the  further  theor}^,  not  by  any 
means  to  be  lost  sight  of,  that  taking  everything  into  account,  it  is 
for  the  advantage  of  the  country  that  there  should  be  competition 
between  routes,  and  that  not  to  have  a  rate  adjustment  which  per- 
mits that  competition  is  to  give  a  preference  to  one  port  over  another. 

Senator  Foraker.  In  other  words,  if  j^ou  were  to  leave  those  ports 
to  themselves  without  any  preferential  or  differential  allowed  in  the 
rates  it  would  be  a  different  result  from  that  which  we  have  neces- 
sarily ? 

Mr.  Fifer.  Perhaps  I  do  not  qiiite  appreciate  that  question. 

Senator  Foraker.  I  say  if  it  were  not  for  a  differential,  which  is 
arbitrarily  fixed,  the  business  would  not  be  so  arranged  that  the  ports 
would  share  reasonably  in  the  export  trade? 

]Mr.  FiT'ER.  I  think  that  necessarily  follows. 

Senator  Foraker.- Now,  another  case.  I  had  my  attention  called 
to  the  fact — I  saw  it  somewhere — that  between  Buffalo  and  Boston 
and  Fairport  and  Baltimore  the  distance  is  exactly  the  same,  and  yet 
there  is  a  preferential  of  3  mills  by  your  recent  order,  I  notice,  in 
favor  of  the  haul  from  Fairport  to  Baltimore.  Heretofore  there  was 
a  preferential  in  favor  of  the  rate  from  Fairport  to  Baltimore  as 
against  the  rate  from  Buffalo  to  Boston  of  1:  mills.  Fairport  is  in 
Ohio.  Now,  on  what  ground  is 'that  differential  justified?  That  is 
what  I  want  to  get,  In  a  word,  if  you  can  tell  me. 

Mr.  Commissioner  Knapp.  Of  course,  the  best  answer  would  be  to 
refer  you  to  the  reasons  which  the  Commission  has  assigned,  but  in 
a  word  it  is  on  the  theory  that  there  are  certain  disabilities  at  the  ports 
of  Philadelphia  and  Baltimore,  and  particularly^  with  reference  to 
the  amount  of  ocean  tonnage  lea^dng  those  ports,  the  number  of  sail- 
ings, the  verj^  much  less  number  of  foreign  ports  reached  from  Balti- 
more and  Philadelphia  than  from  New  York,  so  that  there  must  be 
opportunities  for  a  somewhat  lower  through  rate  hj  Philadelphia 
and  Baltimore  to  the  foreign  destination  in  order  that  thej^  may  have 
an  opportunity  to  compete  for  that  trade. 

Senator  Foraker.  That  is  what  I  want  to  get  at.  Now,  the  dis- 
tance being  exactly  the  same,  and  there  being  no  material  difference 
between  the  hauls,  the  grades  being  practically  the  same,  and  the 
roads  being  equally  good,  as  it  may  be  assumed  without  contradic- 


204  EEGULATION    OF    RAILWAY   RATES. 

tion,  I  think,  then  there  is  no  ground  in  anything  that  is  fonnd 
before  you  reach  the  coast  to  justify  a  differential? 

Mr.  FiFER.  Oh,  yes;  at  Philadelphia  and  Baltimore  they  are 
nearer  the  grain  fields  of  the  Middle  West. 

Senator  For^vker.  I  am  talking  about  Fairport  and  Baltimore 
and  Buffalo  to  Boston.  Those  are  the  ports  that  I  am  talking  about, 
where  3^ou  allow  a  differential  of  3  mills.  On  what  ground  is  that 
justified? 

]Mr.  Commissioner  Knapp.  As  I  have  said,  upon  the  ground  that 
the  routes  to  foreign  destinations  via  Philadelphia  and  Baltimore 
are  under  certain  disabilities,  which  make  it  necessary  that  the 
through  rate  be  somewhat  more  agreeable  to  the  shipper  by  those 
routes  in  order  to  enable  them  to  compete. 

Mr.  FiFER.  That  question  was  all  thrashed  out  before  I  became  a 
member  of  the  Commission.  There  was  a  commission  or  a  committee 
called  the  Thurman  Commission^  which  investigated  that  at  one 
time,  and  it  was  also  before  this  Commission. 

Senator  Kean.  That  was  before  the  passage  of  the  interstate-com- 
merce law? 

Mr.  FiFER.  The  policy  of  the  railroads  of  this  country  seems  to  be 
to  make  the  lowest  rate  on  export  traffic,  and  that  I  think  prevails 
in  about  all  the  countries  in  the  world.  It  developed  in  the  plate- 
glass  case,  the  last  case  before  the  Commission,  that  in  Belgium, 
where  most  of  the  plate  glass  of  the  world  is  made,  on  export  glass 
the  railroads  charge  much  less  than  they  do  when  they  carry  it  for 
domestic  consumption.  Now,  this  differential  question  betAveen  these 
four  North  Atlantic  ports  has  been  before  the  Commission  only  once 
since  I  have  been  on  the  Commission,  and  it  was  by  arbitration,  by 
consent  of  the  localities  and  the  railroads,  that  they  were  submitted 
to  the  Commission  to  say  what  was  fair  and  right  under  all  the  cir- 
cumstances. Now,  there  were  two  reasons  that  influenced  my  mind  to 
make  the  decision  that  we  did.  One  was  that  those  differentials 
had  existed  for  a  great  many  years.  Men  had  invested,  perhaps, 
fortunes,  and  cities  had  been  built  up  on  the  faith  of  them,  and  then 
the  shipjDers  from  the  West,  esjDecially  the  grain  men,  wanted  all 
these  ports  kept  open  so  that  they  could  make  their  choice.  Now,  if 
left  simply  to  natural  conditions,  the  port  having  the  greatest  natural 
advantage  would  draw  to  itself  all  the  trade,  and  trade  would 
become  congested,  and  the  others  would  go  out  of  business,  their 
vessels,  for  handling  grain  and  the  products  of  grain,  would  run 
down,  and  all  that. 

Now,  we  took  the  whole  question  as  a  sort  of  an  equitable  question 
and  decided  what  was  right  and  fair  between  these  ports,  not  on  the 
cold  question  of  natural  advantage  alone,  as  we  would,  jDossiblj', 
in  some  other  case  have  done  or  as  a  court  might  have  to  do.  It 
was  a  sort  of  a  compromise  finding  and  following  the  findings  of 
the  Thurman  commission  or  committee  and  the  previous  finding  of 
our  own  Commission. 

Senator  Cullom.  The  Thurman  committee  or  commission  was 
really  at  work  before  the  original  interstate-commerce  act  was  passed. 

Mr.  FiFER.  Yes;  but  they  did  not  change  the  facts  nor  circum- 
stances.    They  existed  just  the  same. 

Senator  Foraker.  They  made  their  finding  in  1882,  I  think,  five 
years  before  the  interstate-commerce  act  was  passed. 


REGULATION    OF    RAILWAY   RATES.  205 

Mr.  FiFER.  Now,  the  question  was  whether  it  was  best  for  the  peo- 
ple of  this  country  to  have  one  North  Atlantic  port  for  their  traffic, 
through  which  to  reach  foreign  countries,  or  whether  it  was  best  to 
keep  them  all  open  so  that  the  western  farmer  and  the  western  pro- 
ducer could  take  his  choice.  Now,  those  are  the  influences  that  con- 
trolled my  mind  in  the  determination  of  that  question,  giving  due 
weight  also  to  the  natural  advantages  of  the  different  ports. 

Senator  Foraker.  I  was  not  complaining  of  the  opinion.  I  was 
merely  stating  that  fact. 

Mr.  FiFER.  Of  course  we  could  have  taken  the  internal  rate,  the 
railroad  rate,  and  carried  it  down  to  the  water  and  chopped  it  off 
right  there  and  said  "  we  w^ill  not  look  beyond  our  own  limits  at  all ;  " 
but  we  took  into  consideration  the  whole  situation,  and  that  is 
what  all  parties,  the  complainants  and  the  defendants — if  I  may 
speak  of  them  as  such — desired  we  should  do,  and  we  investigated 
it  and  did  the  best  we  could  under  the  circumstances. 

Senator  Foster  of  Louisiana.  Judge  Clements,  in  his  statement 
the  other  day,  stated  that  within  the  last  two  years  the  complaints 
lodged  against  the  railroads  have  been  more  numerous  than  in  pre- 
ceding years.  A'VHiat  is  the  character  and  nature  of  those  complaints? 
Do  they  refer  to  unreasonable  and  unjust  charges  or  inequality  of 
rates  between  localities  or  discriminations  between  localities  or 
persons  ? 

Mr.  FiFER.  I  can  not  answer  definitely  with  regard  to  that.  Mr. 
Clements  is  one  of  the  members  longest  on  the  Commission,  and 
familiar  with  so  many  of  the  facts  internally  concerning  the  work 
of  the  Commission,  so  that  it  was  given  over  to  him  to  examine  these 
questions;  and  anyway,  our  Commission  in  that  particular  is  a  lit- 
tle like  a  court.  A  complaint  is  made.  We  do  not  rush  in  every 
time  a  complaint  is  made  and  read  it  over.  The  complaint  is  entered 
and  under  the  statute  we  fix  a  time  when  the  defendant  must 
answer,  and  generally  before  the  case  is  heard  we  look  over  the  papers 
and  see  what  are  the  issues.  For  that  reason,  I  can  not  answer  spe- 
cifically. I  can  say  generally  that  I  think  some  of  them  concern  ex- 
cessive rates,  but  mostly  perhaps  it  is  discriminations  between  locali- 
ties, and  all  sorts  of  questions.  Still,  if  you  desire  exact  information 
in  regard  to  that,  we  could  take  the  cases  on  file  with  the  Commission, 
so  that  there  would  be  no  doubt  about  it.  They  are  susceptible  of 
exact  information. 

Senator  Foster  of  Louisiana.  I  was  under  the  impression  that  the 
majority  of  the  complaints  were  lodged  against  the  inequality  of 
rates  between  places  and  localities. 

Mr.  FiEER.  Very  largely  so,  I  think. 

Senator  Foster  of  Louisiana,  Do  you  find  the  law  to-day  adequate 
to  meet  these  complaints  that  are  lodged  against  the  carriers  ? 

Mr.  FiFER.  Oh,  in  a  measure  we  can  administer  some  relief,  but  I 
think  it  is  inadequate.  I  think,  as  I  have  said  before,  that  if  this 
power  existed — it  is  a  little  like  the  President  has  said.  He  wanted  a 
large  Navy,  not  for  war,  but  in  order  to  preserve  peace;  and  in  the 
same  way,  if  we  have  a  delegation  of  power  here  that  is  effective,  why, 
you  will  not  have  to  exercise  it  as  much  as  a  great  many  think.  In 
my  judgment,  it  will  sober  these  gentlemen  and  make  them  think 
twice  before  they  raise  a  rate,  and  I  think,  on  the  whole,  it  would  tend 
to  more  equitable  rates  throughout  the  country. 


206       *  REGULATION    OF   RAILWAY   RATES. 

Senator  Foster  of  Louisiana.  If  this  constitutional  power  was  con- 
ferred upon  the  Commission  or  some  other  tribunal,  would  that  meet 
the  requirements  of  the  situation,  without  any  other  additional 
legislation  ? 

Mr.  FiFER.  I  do  not  believe  I  catch  your  point.  Senator. 

Senator  Foster  of  Louisiana.  If  a  law  should  be  passed  conferring 
upon  the  Commission  or  upon  some  other  tribunal  the  power  and  au- 
thority to  fix  the  rates  after  condemning  a  rate  as  unreasonable,  would 
that  meet  the  situation  ?  AVould  it  enable  the  Commission  to  correct 
all  of  the  abuses  that  now  exist  ? 

Mr.  FiFER.  Oh,  possibly  not  all  of  the  abuses;  but  it  would  assist 
in  a  very  large  measure.  Now,  to  illustrate,  there  are  discriminations 
of  all  Ivinds — large  discriminations  and  small  discriminations.  There 
is  a  gentleman  in  this  room  who  made  complaint  against  a  railroad. 
He  was  a  fruit  shipper  from  the  South,  and  he  complained  that  he  was 
not  furnished  equal  facilities  for  unloading  when  the  fruit  reached 
Chicago.  Well,  that  was  a  discrimination,  and  there  are  many  others 
of  similar  kinds ;  so  that  you  can  not  make  a  law  to  meet  every  little 
case  of  that  kind,  but  it  must  be  under  the  broad  provisions  of  the 
law  that  prohibits  discriminations  of  all  kinds. 

Senator  Kean.  AVas  there  a  complaint  made  in  that  case? 

Mr.  Fifer.  There  was  a  complaint  made  in  that  case,  and  it  was 
heard ;   but  before  an  opinion  was  put  forth  the  parties  got  together 
and  adjusted  the  matter  between  them,  and  now  they  are  the  yerj  best  - 
of  friends,  I  believe. 

Senator  Kean.  It  was  not  the  question  of  rate,  then,  but  it  was  a 
question  of  service? 

Mr.  FiFER.  It  was  a  question  of  service,  and  it  did  not  affect  the 
rate,  and  j^et  it  was  covered  by  the  statute.  I  mention  that  to  show 
you  that  there  are  other  discriminations  and  other  complaints  that 
are  frequently  made  that  perhaps  have  not  been  called  to  your  atten- 
tion, as  illustrated  in  this  particular  instance. 

Senator  Foster  of  Louisiana.  You  think,  then,  that  additional  leg- 
islation is  necessary,  even  should  the  Commission  be  clothed  with  this 
additional  power,  do  you? 

jMr.  Fifer.  No;  I  think  there  was  power  already  in  the  Commis- 
sion to  meet  the  requirements  of  the  fruit  case  that  I  speak  of. 

Senator  Foster  of  Louisiana.  No;  I  mean  generally  speaking.  If 
Congress  should  simply  pass  an  act  conferring  upon  this  Commission 
autliority  to  fix  a  rate  after  the  Commission  had  condemned  an  ex- 
isting rate  as  unreasonable,  would  that  meet  the  requirements  of  the 
present  situation? 

Mr.  Fifer.  I  do  not  see  what  more  Congress  can  do  in  that  par- 
ticular instance. 

Senator  Foster  of  Louisiana.  You  think  that  the  present  law,  the 
law  as  it  now  stands,  and  the  clothing  of  the  Commission  with  this 
additional  power  would  meet  the  conditions  ? 

Mr.  Fifer.  Not  that  alone.  I  have  referred  to  other  things  here 
that  I  think  ought  to  go  with  it. 

Senator  Foster  of  Louisiana.  With  the  suggestions  you  have 
made  ? 

Mr.  Fifer.  Yes;  and  I  do  not  say  now  that  the  amendments  I  have 
suggested  here  will  cover  the  whole  gauntlet  at  all. 

Senator  Foster  of  Louisiana.  I  have  been  absent  from  a  good  many 


I 

KEGULATIOK"    OF   RAILWAY   RATES.  207 

of  the  hearings,  and  I  should  like  to  ask  you  if  the  rate  charges  now 
are  lower  than  they  have  been  for  a  number  of  years  past,  taking 
the  general  railroad  rate  throughout  the  country  ? 

Mr.  FiFER.  That  would  be  a  question  of  almost  impossible  solu- 
tion. The  railroads  would  say  "j^es,"  while  the  Commission  would 
say,  on  the  whole  that  they  are  higher.  Now,  in  a  sense  on  many 
articles,  the  rates  are  lower;  and  yet  j^ou  take  the  articles  that 
constitute  the  great  bulk  of  the  traffic — the  products  of  the  farm 
and  the  factory  and  the  forest,  which  I  think  constitute  the  large 
bulk  of  the  heavy  traffic  of  this  country,  my  own  notion — and  yet  I 
could  not  say  without  going  over  the  tariffs  for  the  specific  purpose 
of  ascertaining  that,  whether  on  the  whole  they  were  higher,  but  I 
think  the  tariffs,  as  adjusted  to-day,  are  yielding  a  larger  revenue  to 
the  roads  than  they  have  formerly  yielded.  I  know  the  roads,  judg- 
ing from  net  earnings,  are  very  prosperous.  Well,  you  will  find,  as 
we  have  found,  if  3'Ou  dig  into  the  question,  that  the}^  are  making 
very  large  improvements  all  over  the  country.  There  never  was  a 
time  when  railroads  were  being  improved  as  they  are  to-day.  Bridges 
are  being  put  in,  curves  are  being  taken  out,  grades  are  being  cut 
down,  sidetracks  are  being  put  in,  and  better  depot  buildings,  both 
freight  and  passenger,  are  being  erected.  Now,  it  has  been  testified 
to  before  us,  even  by  Mr.  Baer,  of  the  anthracite  coal  roads,  that 
when  they  pnt  in  a  steel  bridge,  that  is  charged  to  current  expenses, 
that  they  do  not  charge  it  to  permanent  improvements;  and  when 
they  put  in  a  sidetracl?:  or  build  a  station,  I  think  it  was  testified 
that  they  charged  that  to  current  expenses,  and  that  it  was  not 
charged  up  to  pei'manent  improvements.  Well,  now,  there  is  so 
much  of  that  going  on  that  it  reduces  the  revenues  of  the  roads 
unduly.  They  will  get  through  with  these  vast  betterments  that  are 
going  on  at  this  time  and  then  their  earnings  will  make  a  better 
showing. 

Senator  Foster,  of  Louisiana.  Then  your  judgment  is  that  the 
rates  are  higher  than  they  have  been  in  former  j^ears  ? 

Mr.  FiFER.  Well,  as  I  say,  I  could  not  speak  definitely  on  that  mat- 
ter. As  I  stated  a  moment  ago,  the  statistical  part  of  the  statement 
was  very  kindly  assumed  by  Judge  Clements.  It  was  of  no  use  for 
all  of  us  to  go  over  that  matter,  and  he  assumed  the  work  of  the 
preparation  for  that  part  of  the  statement. 

Senator  Dolliver.  I  want  to  get  at  the  opinion  of  the  Commission 
as  to  how  wide  this  power  to  fix  rates  ought  to  be.  Now,  I  can  see 
very  clearly  that  it  might  be  of  great  advantage  to  the  public  to  fix 
the  rates  in  a  case  where  the  existing  rate  was  complained  of  as  un- 
just and  unreasonable  to  give  the  public  the  advantage  of  a  reduction 
of  that  rate;  but,  if  I  understood  Judge  Clements  correctlj'^,  he  gave 
the  impression  that  that  power  would  be  absolutely  worthless  as  an 
instrument  or  means  for  putting  an  end  to  discriminations  between 
places.  In  answer  to  a  question  which  I  propounded  to  him  as 
follows : 

"  So  that  the  mere  power  to  fix  the  maximum  rate  would  not  enable 
the  Commission  to  handle  the  question  of  discriminations  at  all." 

Judge  Clements  replied  that  he  did  not  think  it  would,  and  after- 
wards added  that  is  was  his  opinion — and  I  think  he  undertook  to 
express  the  opinion  of  the  Commission — that  this  power  to  supervise 
the  rates  might  properly  be  confined  to  the  power  of  condemning  an 


208  EEGULATIOX    OF   KAILWAY   RATES. 

unjust  and  unreasonable  rate  and  substituting  one  that  was  just  and 
reasonable. 

Mr.  FiFER.  Yes. 

Senator  Dolliver.  AVhat  is  your  opinion  about  that?  AVhat  ad- 
vantage, for  instance,  could  the  public  get  in  the  matter  of  putting 
an  end  to  rebates  by  giving  the  Commission  the  poAver  to  fix  rates  ? 

]Mr.  FiFER.  1  think  you  were  not  in  the  room.  Senator,  when  I  was 
on  that  branch  of  the  discussion  in  regard  to  rebates.  I  do  not  think 
that  has  anj'thing  to  do  with  rebates. 

Senator  Doixiver.  So  that  whatever  power  the  Commission  would 
have  over  the  rates  would  probably  not  increase  its  efficiency  in  its 
effort  to  abolish  rebates. 

]Mr.  FiFER.  I  think  it  is  a  different  exercise  of  power  altogether.  I 
think  one  is  a  police  power  and  the  other  is  an  administrative  power. 

Senator  Dolliater.  Do  you  agree  with  Judge  Clements  in  saying 
that  the  power  to  fix  a  maximum  rate  in  cases  where  the  complaint 
is  of  discriminations  between  two  localities  would  be  worthless? 

Mr.  FiFER.  No;  and  I  did  not  understand  Judge  Clements  to  say 
that.  If  he  did,  I  hardly  think  I  would  agree  with  him.  As  I  stated 
at  the  outset,  Senator,  there  are  three  sections  of  that  act.  The  first 
is  as  to  reasonable  rates,  the  third  section  is  discrimination  between 
localities,  and  the  fourth  section  is  the  long  and  short  haul  clause. 
Now,  I  would  like  to  have  somebody  tell  me  how  any  infraction  of 
those  statutes  can  ever  be  remedied  without  the  change  of  a  rate? 
Can  you  think  of  any?     You  are  not  on  the  witness  stand,  of  course. 

Senator  Dolliver.  Well,  I  wanted  to  get  at  how  the  discrimination 
between  two  towns  could  be  remedied  by  simply  fixing  maximum 
rates.  It  was  evidently  Judge  Clements's  idea  that  in  case  of  such  a 
discrimination  the  fixing  of  the  maximum  rate  would  be  a  compara- 
tively worthless  proceeding,  because  the  roads  would  be  at  liberty 
to  restate  the  discrimination  in  lower  terms. 

Mr.  Fifer.  Well,  as  I  said  in  the  first  part  of  the  discussion  here, 
when  it  tomes  to  discrimination  between  localities  on  the  same  road — 
mark  you,  we  have  never  exercised  the  authority,  I  think,  when  one 
road  made  one  rate  and  another  road  made  another  rate,  we  do  not 
interfere  with  that — I  stated  that  it  might  be  necessary  in  order  to 
bring  about  a  just  equilibrium  between  those  two  localities  to  bring 
it  about  by  lowering  a  rate  entirely,  or  it  might  be  by  raising  one  rate 
a  little  and  lowering  another,  and  so  bringing  about  a  just  arrange- 
ment between  the  two  places. 

Senator  DoLLmER.  But  would  you  confine  that  to  cases  where  the 
discrimination  occurred  on  the  same  line  of  road? 

Mr.  Fifer.  I  think  I  would.  I  would  not  interfere  with  those 
discriminations  occurring  on  independent  lines,  because  then  you 
run  up  against  the  other  proposition  and  destroy'  the  competition 
between  markets.  For  instance,  if  we  should  take  hold  of  Mr.  Fish's 
road,  if  we  had  the  authority  to  saj\  "  Here,  we  will  fix  your  plate- 
glass  rate  at  so  much,  and  the  rate  for  the  people  at  our  north  At- 
lantic coast  ports  shall  be  fixed  at  so  much,"  then  the  competition 
between  markets  would  be  gone. 

Senator  Dolliver.  I  ask  these  questions  because  an  impression  has 
been  sought  to  be  made  here  that  this  power  of  fixing  rates  or  super- 
vising rates  is  one  that  might  very  greath^  affect  the  commercial 
situation  of  whole  regions  of  country. 


REGULATION    OF    RAILWAY   RATES.  209 

Mr.  FiFKR.   And  unsettle  things. 

vSenator  Dolliver.  xlnd  unsettle  things,  and  I  wanted  to  get  your 
idea  whether  it  v»^ould  be  possible  for  us  in  conferring  this  power 
upon  your  Commission  to  narrow  it,  say,  to  tliese  two  propositions 
which  you  have  mentioned — first,  rates  that  are  exorbitant  and  un- 
reasonable in  themselves,  and,  second,  to  those  discriminations  be- 
tAveen  localities  which  are  perpetrated  by  the  same  railroad,  where 
the  localities  are  on  the  same  line  of  road. 

Mr.  Fifj:r.  Yes.  You  will  find  where  those  discriminations  exist 
that  generally  the  low  rate  is  fixed  by  competition,  and  unless  you 
take  hold  of  other  roads  and  destroy  the  competition  between  markets, 
it  is  almost  impossible  to  raise  that  rate.     You  can  cut  down  the  rate. 

Senator  Doi.liver.  So  you  think  to  confer  the  power  to  do  that  on 
the  Commission  would  probably  net  the  public  no  good  ? 

Mr.  FiFER.  It  might  in  some  cases  and  in  some  instances  it  might 
work  some  good.  Where  the  competition  was  not  very  sharp,  the 
roads  might  raise  their  rates ;  but  it  is  the  opinion  of  the  Commission, 
and  I  think  will  be  the  opinion  of  this  body  when  you  are  through, 
that  the  railroads  can  be  relied  on  to  make  rates  high  enough.  They 
will  take  care  of  that.  It  would  hardly  be  regulating  railroads  to 
jump  in  and  say  that  they  are  not  charging  enough  and  that  they 
must  put  up  their  rates;  and  yet  there  are  instances  where  perhaps 
it  might  be  necessary  to  cut  down  one  rate,  and  let  the  roads  raise 
another  rate  a  little  to  bring  about  a  proper  adjustment. 

Senator  Xewlands.  Suppose  there  should  be  another  depression 
such  as  there  was  from  1893  to  1897,  and  there  should  be,  say,  only 
three-fourths  of  the  present  transportation  business.  Would  not 
the  tendency  be  toward  granting  rebates  again  in  the  contest  between 
these  railroads  for  traffic  ? 

Mr.  FiFER.  The  temptation  would  be  much  greater  than  it  is  when 
the  roads  are  getting  about  all  the  traffic  they  can  haul.  That  stands 
to  reason. 

Senator  Xewlands.  Suppose  such  a  condition  should  occur  again 
and  rebates  should  again  be  given,  do  j^ou  think  you  would  be  in  any 
better  position  to  check  that  condition  than  you  were  from  1893  to 
1897? 

Mr.  FiFER.  My  own  belief  is  that  the  railroads  will  never  have 
the  desire,  and  possibly  under  the  same  temptations  never  would 
return  to  the  rate  cutting  and  the  rebate  paying  which  they  have  done, 
and  if  they  did  the  Elkins  Act  would  now  afford  considerable  relief 
by  means  of  injunction. 

Senator  Kewlands.  By  means  of  injunction? 

Mr.  Fifer.  Yes. 

Senator  Newlands.  You  would  rely  mainly  upon  that,  would  you  ? 

Mr.  Fifer.  Yes. 

Senator  Kewlands.  Now,  prior  to  that  time  the  law  itself  forbade 
these  offenses,  and  parties  were  punished  for  violation  of  the  law? 

Mr,  Fifer.  Yes. 

Senator  Newlands.  Now,  you  substitute  for  that  or  add  to  it  the 
issuing  of  a  writ  of  injunction,  and  the  judge  summarily  punishes  a 
violation  of  the  injunction  ? 

Mr.  Fifer.  That  is  right. 

Senator  Newlands.  I  ask  why  should  the  injunction  be  any  more 
74lA— 05 14 


210  EEGULATION    OF    RAILWAY   RATES. 

effective  than  the  law  itself?     It  certainly  would  not  enable  you  to 
get  at  the  facts  any  more  easily,  would  it? 

Mr.  FiFER.  "Well,  it  operates  more  quickly.  It  avoids  a  long 
hearing  before  a  grand  jury.  It  does  away  with  all  the  prosecution 
officers  of  the  court,  to  some  extent,  and  summarily  you  simply  put 
the  strong  hand  of  the  law  on  the  man's  shoulder  and  bring  him  into 

court  and  find  out 

Senator  Xewlands.  Granting  that,  I  understand  your  chief  diffi- 
culty has  been  in  getting  at  the  facts.  Would  you  not  have  as  much 
difficulty  under  the  injunction  process  in  getting  at  the  facts  as  under 
the  process  of  indictment  ? 

Mr.  FiFER.  Possibh^  I  pointed  out  here  how  T  think  you  could 
get  at  the  facts  much  better  if  the  amendment  was  adopted,  and  that  is 
to  have  some  authority  to  employ  expert  accountants  to  go  into  these 
offices,  and  let  that  be  their  regular  business,  to  examine  these  books ; 
and  still,  even  then,  if  they  have  a  mind  to  pay  rebates  there  would  be 
great  difficulty,  as  there  is  in  finding  out  about  any  crime. 

Senator  Neavlands.  Would  not  that  involve  some  kind  of  a  secret 
service  or  detective  force? 

Mr.  FiFER.  Yes;  it  might  develop  into  that,  and  it  might  become 
necessary  anyway.  There  is  no  great  difference  between  finding  out 
a  violation  of  that  statute  and  a  violation  of  any  other  criminal 
statute. 

Senator  Newlands.  During  the  period  from  1893  to  1897,  when 
this  condition  of  things  existed,  when,  according  to  the  statement  of 
the  traffic  managers  themselves  it  was  general,  did  the  Commission 
make  use  of  detectives  or  a  secret  service  force  of  any  kind  ? 

Mr.  FiFER.  No,  sir;  we  had  no  detectives,  and  as  I  remember  it 
we  had  no  fund,  no  appropriation  that  would  enable  us  to  do  that. 
I  know  in  several  instances  we  could  barely  get  through  with  our 
routine  work. 

Senator  Newlands.  Have  you  such  a  fund  now?  Is  such  a  fund 
provided  now  ? 

Mr.  FiFER.  I  think  it  is  not  in  the  hands  of  the  Commission. 
Senator  Newlands.  In  whose. hands  is  it? 

Mr.  FiFER.  Not  for  this  purpose.  It  was  for  the  enforcement  of 
the  antitrust  law.  There  was  such  a  fund  as  that  placed  in  the 
hands  of  another  Department  of  the  Government. 

Senator  Newlands.  Ought  not  funds  to  be  provided  for  such  pur- 
pose? .         .  .  1     1 

Mr.  FiFER.  I  think  if  you  are  going  to  leave  this  power  with  the 
Commission,  there  ouglit  to  be  some  means  adopted  to  get  at  the 
books— some  skilled  person,  and  possibly  a  number  of  them,  to  keep 
watch  and  detect  the  violations  of  this  law  as  you  would  of  any 
other  law.  I  think  that  ought  to  be  done,  whether  you  leave  this 
power  with  the  Commission  or  whether  you  give  it  to  someone  else. 

Senator  Newlands.  How  would  vou  organize  such  a  service  as 
that? 

Mr.  FiFER.  I  could  not  state  now.  You  would  organize  it  as  you 
would  any  other  detective  force. 

Senator  Neavlands.  Would  you  put  it  under  the  control  of  the 
Commission  or  entirely  separate  ? 

Mr.  FiFER.  I  would  take  that  duty  away  from  the  Commission 


KEGULATIOlSr    OF    EAILWAY   RATES,  211 

entirely  and  make  it  a  separate  duty.  The  railroad  complains,  and  I 
think  justly — although  the  members  of  the  Commission  do  not  agree 
in  regard  to  that  exactly,  but  there  is  no  one  of  them,  I  believe,  who 
would  object  to  it  seriously — the  railroads  do  not  want  to  have  their 
civil  rights  submitted  to  a  tribunal  that  is  spying  upon  them  and 
whose  duty  it  is  to  convict  them  in  the  courts  of  the  country  and  to 
obtain  fines  and  imprisonment  to  be  imposed.  The  conditions  are  not 
just  what  they  ought  to  be  in  that  particular.  I  think  there  is  no 
member  of  the  Commission  who  would  object  seriously  to  taking  the 
duty  of  expert  examination  away  from  the  Commission  and  con- 
ferring it  upon  some  other  body. 

Senator  Newlands.  Admitting  all  that,  my  inquiry  is  as  to  where 
you  would  vest  that  power.  Would  you  put  it  into  the  Attorney- 
General's  department  ? 

Mr.  FiFER.  Yes !  that  would  be  a  proper  place. 

Senator  Newlands.  Then,  in  that  event,  you  would  rely 

Mr.  FiFER  (continuing).  Or  it  might  be  put  into  the  hands  of  the 
Department  of  Commerce  and  Labor. 

Senator  Newlands.  Is  there  not  some  way  of  organizing  this 
Interstate  Commerce  Commision  in  such  a  way  as  that  you  could 
have  one  part  that  will  attend  entirely  to  the  quasi-judicial  functions 
of  hearing  and  determining,  and  another  branch  of  that  Commission 
to  transact  the  detective  and  police  duties  ? 

Mr.  FiFER.  So  far  as  I  can  see  now,  I  would  answer  no. 

Senator  Newlands.  Would  not  that  work  better  than  putting  them 
so  far  apart  as  giving  these  powers  to  the  Attorney-General's  office 
would  involve  ? 

Mr.  FiFER.  It  is  altogether  likely  it  would.  That  is  a  matter  of 
detail,  however,  that  nobody  can  tell  in  advance  just  what  would  be 
best  to  do. 

Senator  Newlands.  I  hope  that  in  making  your  recommendations 
to  the  committee  as  to  the  amendment  of  this  law  you  will  cover  that 
point,  because  we  want  the  benefit  of  your  experience.  My  own  idea 
is  that  yoLi  must  in  the  course  of  your  investigations  and  hearings, 
and  in  "the  discharge  of  your  duties,  get  a  lot  of  information  that 
would  be  available  for  such  purposes  that  would  not  be  available  to 
the  Attorney-General,  who  has  nothing  to  do  with  the  general  per- 
formance of  your  duties. 

Mr.  FiFER.  That  presupposes  that  the  execution  of  the  criminal 
side  of  the  statute  should  remain  with  our  Commission. 

Senator  Newlands.  Either  remain  with  your  Commission  or  be 
intrusted  to  a  branch  of  your  Commision. 

Mr.  FiFER.  Well,  make  it  a  branch;  that  might  be  the  better 
way.  It  is  impossible.  Senator,  for  anybodj^  to  tell  in  advance  just 
what  is  right,  perhaps.  You  would  have  to  try  it  first.  Take  the 
interstate-commerce  act;  was  anybody  foolish  enough  to  suppose 
that  in  providing  for  the  control  of  interstate  commerce  over  a  vast 
country  like  this  the  first  cut  was  going  to  get  just  the  right  law? 
AAliy,  it  takes  a  hundred  years  sometimes  to  perfect  laws.  Take 
all  the  old  English  statutes,  and  the  English  common  law,  which  has 
been  in  existence  for  years  and  years,  and  most  of  the  States  have 
adopted  it.  On  the  one  side  you  have  the  violators  of  the  law  always 
trying  to  break  through  or  get  around  the  law,  and  the  lawmakers 


212  REGULATION    OF    RAILWAY    RATES. 

on  the  other  side  are  ahvays  trying  to  close  up  the  gaps.  AATien  yoii 
come  to  those  old  statutes  that  have  stood  the  test  of  years  you  have 
got  j)erfection;  but  now  you  are  leading  out  on  a  new  branch.  You 
will  not  perfect  this  statute  in  the  next  session  of  Congress.  You 
could  not  do  it  unless  you  had  divine  wisdom.  It  has  got  to  come 
with  experience,  and  in  the  course  of  time,  perhaps  many  years  yet, 
you  will  have  j)erfected  this  statute. 

Senator  Xewlaxds.  Yes;  but  we  ought  to  make  an  effort  to  make 
it  as  perfect  as  possible. 

^Ir.  FiFER.  To  act  under  the  best  light  you  have  at  this  time. 

Senator  Xeavlands.  Xow,  another  question  in  regard  to  the  great 
fixing  centers  of  the  country.  How  many  of  them  are  there,  in  your 
judgment? 

Mr.  FiFER.  I  could  not  tell  that  exactly ;  you  know  the  great  cities 
where  the  railroads  center. 

Senator  Xewlaxds.  Chicago  and  St.  Louis  ? 

Mr.  FiFER.  Yes;  and  Xew  York. 

Senator  Xewlaxds.  Xew  York? 

Mr.  Fifer.  And  Philadelj^hia  and  Baltimore  and  St.  Louis  and 
Kansas  City. 

Senator  Xewlaxds.  You  have  read  the  testimony  of  the  traffic 
managers  as  to  the  thorough  system  they  have  of  keeping  in  contact 
with  commercial  conditions,  obtaining  information,  and  all  that. 
Would  you  regard  it  as  a  good  suggestion  in  connection  with  the 
Interstate  Commerce  Commission  to  have  one  member  of  the  Com- 
mission at  each  one  of  these  rate-making  centers,  so  that  he  could  act 
either  alone  or  in  conjunction  with  other  members  of  the  Commission 
called  from  Washington? 

Mr.  Fifer.  There  are  advantages  about  that,  and  it  has  its  disad- 
vantages. For  myself,  I  have  thought  for  some  time  that  there 
ought  to  be  an  officer  at  Chicago,  and  as  far  back  as  Mr.  Morrison's 
time  on  the  Commission,  I  think  he  advocated  that  all  the  while,  so 
that  people  could  have  somebody  near  by  whom  they  could  go  to  and 
consult;  and  yet  frequently — not  every  day.  but  every  few  days — 
there  are  questions  on  which  the  entire  Commission,  should  pass. 
Xow,  it  will  not  do  to  have  two  commissions  acting  independently  of 
each  other,  because  these  rates  are  so  interwoven  and  interlaced  that 
there  must  be  uniform  action  throughout  the  country. 

Xow,  I  do  not  speak  egotistically  when  I  say  that  the  Commission 
has  a  wider  view  of  all  the  rates  in  eyery  section  and  quarter  of  this 
country  than  any  one  traffic  man  almost  could  have.  He  may  know 
more  about  his  own  particular  locality,  but  we  have  a  wider  vision, 
and  I  may  be  permitted  to  say  that  without  any  egotism  whatever. 

Senator  X'ewlaxds.  You  think,  then,  that  a  man  who  has  not  been 
trained  in  rate  making  or  in  traffic  management  can  go  upon  this 
Commission  and  in  a  few  years  get  a  general  view  of  the  entire  sit- 
uation ? 

Mr.  Fifer.  X"ot  in  a  few  years.  It  takes  a  number  of  years,  and  it 
takes  hard  study.  Xow,  I  think  in  the  year  closing  the  first  of  last 
July,  which  is  what  we  call  our  year,  1  must  have  traveled  ten  to 
fifteen  thousand  miles,  and  what  is  true  of  myself  is  true  practically 
of  all  the  other  members  of  the  Commission. 

Senator  Kean.  Aiid  you  saw  a  very  prosperous  country. 


KEGULATION    OF   RAILWAY   KATES.  213 

Mr.  FiFER.  Every  section  and  quarter  of  it. 

Senator  Xewlands.  Do  you  think  it  would  be  advisable  to  have 
upon  this  Commission  in  any  way  men  who  have  been  trained  as  in 
the  traflSc  departments  of  the  various  railroads,  who  have  acquired  a 
large  experience  in  rate  making? 

Mr.  FiFER.  Well,  I  think  it  would  be  well  to  have  some  man  of  that 
kind  on  the  Commission,  of  practical  experience ;  but  after  all,  when 
you  come  to  a  throw-down,  when  it  comes  to  the  last  say,  it  must 
be  said  by  a  court  composed  of  lawyers;  and  after  all  these  freight 
men  thrash  out  the  whole  question  they  make  their  rates  and  they 
come  to  our  Commission.  It  is  all  digested.  You  have  their  side  of 
the  case  in  a  nutshell  and  you  have  the  complaint,  and  you  soon  catch 
the  force  of  what  they  say  about  it  and  get  onto  what  really  ought  to 
be  done. 

Of  course,  if  all  the  freight  men  in  the  United  States  were  to  get 
together  and  undertake  to  make  a  schedule  of  rates  to  do  exact  and 
equal  justice  between  all  parties,  they  could  not  do  it,  and  this  com- 
mittee can  never  frame  a  law  that  will  do  exact  and  equal  justice  in 
every  particular.  A  brave  old  English  judge,  after  a  lifetime  upon 
the  bench,  in  thinking  and  talking  over  these  perplexing  questions, 
exclaimed  in  the  bitterness  of  despair,  "  How  imperfect  is  the  most 
perfect  system  of  human  justice !  ''  You  can  never  obtain  absolute 
justice,  especially  in  these  cases.  It  is  not  like  the  trial  of  a  promis- 
sory-note case  before  a  court.  In  that  case  either  the  man  executed 
the  note  or  he  did  not.  Either  he  owes  the  money  or  he  does  iiot,  and 
if  he  owes  it  you  figure  up  the  interest  and  you  can  reach  an  abso- 
lutely correct  solution,  but  this  is  only  an  approximation. 

Senator  Newlands.  Still  it  is  a  duty  that  requires  men  of  good 
judgment,  and  the  question  I  have  asked  you  is  as  to  whether  the 
efficiency  of  the  Commission  would,  in  your  judgment,  be  increased 
by  adding  to  your  number  one  or  more  men  who  had  been  trained 
in  rate  making. 

Mr.  FiFER.  Well,  as  I  said  a  moment  ago,  I  think  one  such  man 
on  the  Commission  would  aid  very  materiallj^ 

Senator  Newlands.  You  think  he  would  aid  and  not  detract  from 
the  work  of  the  Commission? 

Mr.  Fifer.  Oh,  I  think  he  would  be  a  help,  yes ;  because  you  could 
lean  on  him,  and  he  being  a  freight  man  might  give  you  points. 

Senator  Xewlands.  Now,  as  to  elasticity.  Assuming  that  we  pass 
a  law  giving  you  the  power  upon  complaint  to  determine  what  is  a 
reasonable  rate.  Apparently  that  would  be  the  fixed  rate  for  the 
future,  would  it  not  ? 

Mr.  Fifer.  It  might  or  it  might  not. 

Senator  Newlands.  Xow,  do  you  recognize  the  fact  that  it  is  at  all 
important  to  keep  these  tariffs  in  a  flexible  or  elastic  condition,  so 
that  rates  can  be  changed  quickly  in  response  to  changed  conditions? 

Mr.  Fifer.  Do  I  believe  in  that  ? 

Senator  Newlands.  Yes. 

Mr.  Fifer.  Most  certainly. 

Senator  Neavlands.  Very  well.  Xow,  a  rate  fixed  by  the  Commis- 
sion as  a  reasonable  rate  would  apparent^  be  a  permanent  rate, 
would  it  not? 

Mr.  Fifer.  I  am  verj  glad  you  called  my  attention  to  that.  We 
have  talked  that  question  over  between  ourselves  on  the  Commission, 


224  EEGULATIOiSr    OF    RAILWAY   EATES. 

its  service  to  tlie  junction  point,  namely.  River  Junction,  Fla.,  the  Louisville  and 
Nashville  exacted  a  share  of  the  through  joint  rates  to  Savannah  which  greatly 
exceeded  its  purely  local  rates  for  like  distances  to  Pensacola,  while  the  shares 
accepted  by  its  connecting  carriers  were  reasonably  low.  Upon  consideration 
of  all  the  facts  and  circurostances  the  Commission  held  that  the  shares  of  the 
Louisville  and  Nashville  in  the  freight  rates  to  Savannah  were  unreasonable 
and  unjust  under  sections  1  and  3  of  the  act,  in  comparison  with  the  rates  to 
Pensacola. 

The  Commission  further  held  that  rates  on  rosin  and  turpentine  from  such 
Pensacola  and  Atlantic  division  stations  to  Savannah  should  be  adjusted  to  the 
rates  to  Pensacola  by  adding  to  the  local  rates  of  the  Louisville  and  Nashville 
for  the  distance  to  Pensacola  which  is  nearest  to  the  distance  from  each  sta- 
tion to  River  Junction  the  present  share  accepted  by  the  carriers  to  Savannah 
from  River  Junction,  provided  that  on  shipments  of  turpentine  to  Savannah 
from  stations  east  of  Mossy  Head  the  Louisville  and  Nashville  should  have  more 
than  its  local  rates  for  like  distances  to  Pensacola,  and  that  such  rates  should 
be  determined  by  adding  the  rate  of  6  cents  from  Sneads  to  Pensacola,  the  car- 
riers east  of  River  Junction  accepting  their  present  share  from  such  stations 
east  of  Mossy  Head. 

\^'ith  resjiect  to  these  rosin  and  turpentine  rates,  the  Commission  said  in  its 
opinion  that  whatever  difference  may  have  seemed  necessary  at  the  outset  to 
create  a  demand  in  the  Pensacola  market,  it  had  become  apparent  after  several 
years'  trial  that  the  rates  to  Savannah,  as  compared  with  the  Pensacola  rates, 
gave  an  unwarranted  ad\antage  to  I'ensacola ;  that  in  endeavoring  to  build  up 
the  near-by  market  at  Pensacola.  and  so  furnish  these  products  with  a  '.iiarket 
in  addition  to  the  one  existing  at  Savannah,  the  Louisville  and  Nashviile  /as 
acting  in  the  interest  of  producers  of  and  dealers  in  naval  stores  on  its  Pensa- 
cola and  Atlantic  division,  but  that  it  had  so  adjusted  rates  as  to  give  Pensacola 
a  practical  monopoly  of  the  trade.  The  Louisville  and  Nashville  claimed  that 
the  lower  scale  of  rates  to  Pensacola  was  necessary  to  hold  the  traffic  for  long 
hauls  on  the  Louisville  and  Nashville  system  to  points  north  and  west  of  Pen- 
sacola. The  Commission  ruled  that  when  a  carrier  makes  rates  ,to  two  com- 
peting localities  which  give  one  a  practical  monopoly  over  the  other  because 
it  can  secure  reshipments  from  the  favored  locality'  and  none  from  the  other,  it 
goes  beyond  serving  its  fair  interests  and  disregards  the  statutory  requirement 
of  relative  equality  as  between  persons,  localities,  and  descriptions  of  traffic. 

The  railroad  compajiies  against  whom  the  order  was  directed  refused  to  Qbey 
it.  and  thereupon  the  Commission  brought  suit  to  enforce  its  order  in  the  United 
States  circuit  court  for  the  southern  district  of  Georgia.  That  court,  in  July, 
1902.  rendered  its  decision,  fully  sustaining  the  Commission  and  requiring  the 
enforcement  of  the  various  provisions  of  the  order.  The  carriers  appealed  to 
the  circuit  court  of  appeals,  but  the  appeal  was  never  perfected.  The  president 
of  the  Louisville  and  Nasiiville  Railroad,  the  general  superintendent  of  the 
second  division  of  the  Atlantic  Coast  Line,  and  the  superintendent  of  the  fifth 
division  of  the  Seaboard  Air  Line  were  cited  before  the  court  for  contempt. 
Subsequently,  upon  hearing  in  the  contempt  case,  the  defendants  offered  to  com- 
ply with  the  decree  of  the  court  enforcing  the  order  of  the  Commission,  and 
thereupon,  counsel  for  all  parties  consenting,  a  decree  was  entered  by  the  court 
suspending  the  contempt  proceedings  until  otherwise  ordered.  In  that  decree 
the  railroad  companies  were  granted  leave  upon  substantial  changes  of  the 
circumstances  and  conditions  affecting  the  traffic  to  apply  to  the  court  for  such 
modification  of  its  decree  as  tliey  might  desire. 

The  defendant  railroad  companies  were  required  to  pay  the  costs  of  the  con- 
tempt proceeding  and  to  refund  to  the  parties  entitled  thereto  any  charges 
collected  by  them  in  excess  of  the  rates  provided  for  in  the  decree  enforcing  the 
order  of  the  Commission. 

Xow,  there  is  one  of  the  most  complicated  cases,  involving  various 
interests  and  various  points  and  many  companies.  The  Commission 
made  a  decision.  Xow,  "what  happened?  The  company  refused  to 
pay.  They  took  an  appeal,  but  did  not  perfect  it,  and  when  they 
were  brought  up  for  refusing  to  obey  the  order  of  the  court,  as  they 
had  been  ordered  to  do.  turned  around  and  paid  it.  "Well,  there  was 
no  panic  produced  by  that  thing.  There  was  no  great  wrong  done. 
The  roads  themselves  were  unwilling  to  take  it  to  a  higher  court,  and 
rather  than  perfect  their  appeal  and  prosecute  the  procedings,  they 


EEGULATION    OP    EAILWAY   KATES.  225 

jdelded  to  the  decision  of  the  circuit  court.  That  shows  exactly  how 
this  Commission  has  been  proceeding.  Everything  has  been  consid- 
ered, and  I  think  its  work  has  been  eminently  beneficial  to  the  rail- 
roads and  to  the  country.  There  have  been  many  cases  that  have 
been  settled,  many  little  cases,  many  little  irregularities,  where 
amicable  relations  have  been  established  between  the  shipper  and  the 
railroad  company  by  virtue  of  the  action  of  the  Commission. 

I  will  mention  one  little  thing.  A  former  constitutent  of  mine, 
from  IMissouri,  living  in  the  strawberry  region,  sent  me  a  bill  that 
he  had  paid.  I  sent  it  down  to  one  of  our  auditors.  He  compared 
it  with  the  rating  and  the  bill  of  rate  or  rates  filed  by  that  raik'oad 
company,  and  there  was  an  overcharge  of  probably  $56.  I  have 
forgotten  the  exact  amount — do  not  remember  it  exactly.  The  com- 
pany was  notified  that  this  overcharge  existed.  Now,  as  a  matter 
of  course,  that  party  could  have  gone  into  court,  and  there  is  no 
doubt  he  could  have  shown  a  clear  violation  of  the  law.  The  Com- 
mission hunted  the  matter  up,  and  they  settled  it.  They  imme- 
diately advised  me  they  would  have  the  matter  looked  up,  and  it  was 
done. 

Senator  Cullom.  '\^nio  hunted  it  up  ? 

Mr.  CocKRELL.  The  railroad  company.  He  could  have  gone  to 
court  and  harassed  the  railroad  company  if  he  had  wanted  to  do  so, 
but  he  would  have  been  compelled  to  pay  the  cost,  for  it  was  a  clear 
error. 

I  find,  in  looking  over  the  reports  and  decisions  of  the  Commission, 
that  that  has  been  the  general  rule,  and  that  many  cases  have  been 
decided,  and  many  cases  have  decided  where  damages  were  assessed 
by  the  Commission,  and  the  railroads  have  paid  them  rather  than  to 
go  into  further  litigation.  I  believe  that  it  is  to  the  very  best  inter- 
ests of  the  railroads  that  this  power  shall  be  delegated  and  the  ques- 
tion settled,  and  that  there  will  not  be  any  abuse  of  power  in  a  Com- 
mission selected  by  the  President  and  confirmed  by  the  Senate,  fol- 
lowing the  precedents  that  have  been  established  by  the  Commission 
itself  and  hj  the  decisions  of  the  courts. 

Senator  Cullom.  You  mean  that  there  will  be  no  danger  to  the 
railroads  ? 

Mr.  CocKKELL.  No  danger  to  anybody.  I  believe  it  will  be  pro- 
motive of  good.  I  believe  it  will  be  to  the  interests  of  the  railroads, 
and  that  they  will  thank  Congress  inside  of  twelve  or  eighteen 
months  for  having  delegated  that  authority  to  the  Commission. 

The  Chairman.  The  committee  desires  to  thank  the  members  of 
the  Commission  for  their  attendance  and  the  statements  which  they 
have  presented. 

Senator  Newlands.  Before  the  Commission  leaves,  I  would  ask,  do 
I  understand  that  they  are  to  submit  to  the  committee  amendments 
that  they  would  suggest  to  this  bill,  and  among  other  things  I  would 
call  their  attention  to  this  division  of  the  poAvers  of  the  Commission, 
either  into  two  branches  of  the  same  Commission  or  segregation  to 
some  other  Department. 

74lA— 05 15 


216  REGULATION    OF    RAILWAY    RATES. 

year,  and  we  are  getting  to  have  a  pretty  considerable  system  of  rail- 
road law  here,  gro^^'ing  out  of  the  decisions  of  the  courts,  and  for  that 
reason  I  would  leave  this  question  to  the  existing  courts. 

Senator  Dolliver.  There  might  l^e  a  point  between  the  rate  fixed 
by  the  railroads  and  the  rate  suljstituted  by  the  Commission  where 
justice  and  reasonableness  would  lie. 

Mr.  CocKRELL.  That  is  true,  and  when  the  court  found 

Senator  Dolliver.  Could  we  clotlie  the  court  with  the  jurisdiction 
to  find  that  point? 

Mr.  CocKRELL.  AVlien  the  court  found  that  the  rate  first  fixed  by 
the  railroad  company  Avas  unreasonable  and  unjust,  then  if  it  should 
find  that  the  rate  fixed  by  the  Commission  was  also  unreasonable  and 
unjust,  it  would  devolve  upon  the  railroad  company  to  fix  another 
rate,  and  necessarily  that  rate  would  have  to  be  intermediate  between 
the  rates  first  fixed  by  the  railroad  and  then  the  rate  fixed  by  the 
Commission,  both  of  which  were  declared  to  be  unreasonable  and 
unjust.  Then  if  that  rate  afterwards  fixed  was  still  complained  of,  I 
think  the  Commission  would  have  authority  to  reexamine  the  case 
and  again  fix  upon  some  rate  that  would  be  deemed  reasonable  and 
just. 

Senator  Dolliver.  The  courts  have  seemed  to  hold  that  in  adjudg- 
ing rates  fixed  by  the  Commission  to  be  unlawful,  a  court  would  be 
controlled,  not  by  the  question  of  its  reasonableness,  but  by  a  very 
much  narrower  question,  to  wit,  whether  it  confiscated  the  property 
of  the  railroad. 

Mr.  CocKRELL.  I  do  not  think  so.  I  do  not  think  our  court  would 
be  tender-footed  about  that.  I  think  the}^  would  decide  the  ques- 
tion exactly  as  Congress  presented  it  to  them,  and  that  is  whether  it 
was  a  reasonable  or  an  unreasonable  rate. 

Senator  Xewlands.  And  they  would  probably  hold  that  anything 
less  than  a  reasonable  rate  was  a  confiscatory  rate? 

Mr.  Cockrell.  I  think  not.  I  do  not  think  they  would  come  that 
close  to  it.  Xow.  of  course,  the  reasonableness,  or  you  may  say  the 
justice,  in  a  question  of  rating  is  a  very  nice  question.  Here  is  a 
rating,  we  will  say,  for  example,  of  5  cents  per  100  pounds.  The 
complainants  say  that  is  too  tnuch.  The  Commission  finds  that 
that  is  an  excessive  rate  and  they  say  that  4  cents  is  a  reasonable 
rate.  There  is  a  margin  of  1  cent  between  them.  Xow,  it  would 
be  a  question  as  to  whether  the  5  cents  was  a  reasonable  rate.  If 
they  found  that,  then  the  court  would  also  have  to  find  whether  the 
4  cents  was  a  reasonable  rate.  Now,  the  court  might  think  that  even 
3^  cents  would  be  a  reasonable  rate,  and  as  a  matter  of  course  if  they 
thought  that  way,  then  they  would  hold  4  cents  to  be  an  unreasonable 
rate  and  would  so  declare.  Now,  when  that  was  declared,  you  would 
have  the  fact  that  they  were  both  found  to  be  too  high.  You  would 
have  a  maximum  to  go  by.  The  Commission  would  have  a  ques- 
tion for  determination  later,  but  I  do  not  see  w^hy  the  court  might 
not  determine  the  question  as  to  whether  the  rate  fixed  either  by  the 
Commission  or  by  the  railroad  was  a  reasonable  and  just  one.  They 
might  have  to  draw  nice  distinctions.  Anybody,  any  railroad  man, 
would  have  to  draw  them,  even  to  mills  or  tenths  of  a  mall.  In  all 
these  things  that  has  to  be  done. 

Senator  Dolliver.  But  you  would  give  to  both  parties  the  right  of 
appeal  ? 


REGULATION    OF    RAILWAY   RATES,  217 

Mr.  CocKRELL.  I  would  give  to  both  parties  the  right  of  appeal. 
•   Senator  Dolliver.  Suppose  the  railroad  fixed  a    rate,  say,  at  5 
cents,  and  the  Commission  at  4.  and  both  parties  appealed,  the  com- 
plainants in  the  original  case  claiming  that  two  and  a  half  cents  was 
about  the  proper  figure. 

]Mr.  CocKRELL.  Well,  then,  it  would  be  for  the  court  to  settle.  I 
think  the  court  would'  settle  it.  The  courts  settle  all  other  con- 
troversies before  them. 

Senator  Cullom.  And  all  that  you  propose  to  say  is  that,  in  your 
judgment,  the  Commission  ought  to  have  the  right  to  determine  what 
would  be  a  reasonable  rate  after  finding  that  another  rate  is  un- 
reasonable  ? 

Mr.  CocKRELL.  Yes:    I  think  so. 

Senator  Cullom.  And  make  an  order  accordingly,  and  if  the  i!*ail- 
roads  did  not  like  it  they  would  have  the  right  to  appeal  to  the 
courts. 

Mr.  CocKRELL.  They  have  the  right  to  appeal  to  the  courts,  inde- 
pendently of  this  law.  If  it  was  confiscatory  proceeding  that  the 
Commission  had  instituted  against  them,  they  would  not  have  to 
refer  to  this  law.  They  could  go  in  and  restrain  us;  but  under  this 
law  they  can  test  it  as  to  whether  it  is  reasonable  or  not.  No  con- 
fiscatory measures  will  ever  be  ])roposed  under  the  law  when  you 
can  take  it  right  into  court.  They  would  have  the  right  to  go  right 
into  court  and  the  railroads  would  have  the  two  remedies.  They 
would  have  the  remedy  provided  here  by  going  into  court,  and  they 
Avould  have  their  natural  remedy  of  proceeding  to  restrain  anything 
that  was  confiscatory  of  their  property  without  due  compensation. 

Senator  Foster  of  Louisiana.  Would  you  have  the  finding  of  the 
Commission  go  into  immediate  effect? 

Mr.  CocKRELL.  The  finding  of  the  Commission  should  go  into  im- 
mediate effect ;  I  am  glad  you  referred  to  that  point,  because  I  did 
not  cover  it  before.  I  would  have  the  findino;  of  the  Commission  sro 
into  immediate  effect,  but  remain  suljject  to  appeal  and  decision  of 
the  courts :  and  if  there  was  no  apj^eal.  or  if  the  decision  of  the  court 
was  that  the  rating  was  a  reasonable  and  just  one,  that  rate  should 
be  observed  and  obeyed,  you  might  say  for  some  reasonable  time — 
you  might  fix  some  time.  It  ought  to  remain  the  rate  and  the  legal 
rate  until  the  conditions  and  circumstances  existing  at  the  time 
the  rate  was  fixed  b}^  the  Commission  had  substantially  changed,  so 
as  to  justify  a  change  in  the  rating. 

Xow,  I  cio  not  know  how  long  that  might  be.  It  certainly  would 
not  be  a  permanent  decision  that  could  not  be  reviewed  in  any  way, 
and  I  am  inclined  to  think  that  the  railroads  would  have  the  right 
under  general  principles  of  right  and  justice,  if  the  conditions  had 
wholly  changed  and  the  circumstances  clearly  justified  an  increase — 
they  ought  to  have  the  right  to  make  a  change,  and  then  that  changed 
rate  Avould  be  subject  to  be  passed  upon  by  the  Commission. 

Senator  Foster,  of  Louisiana.  The  railroads  say  that  as  a  rule  the 
party  losing  a  litigation  in  a  trial  has  the  right  to  suspend  the  execu- 
tion of  the  judgment  even  of  a  court  by  giving  a  proper  bond,  and 
that  the  putting  of  your  finding  into  immediate  execution,  where  an 
appeal  is  allowable,  works  an  injustice  to  them  by  not  giving  them 
the  opportunity  of  having  the  findings  of  the  Commission  suspended 


218  EEGULATIOX  OF  E  AIL  WAY  BATES. 

by  an  appropriate  and  proper  bond,  '^^^lat  have  vou  to  say  about 
that? 

Mr.  CocKRELL.  Do  I  understand  that  in  the  event  that  the  Com- 
mission was  delegated  with  the  authority  to  fix  the  rate  they  would 
want  the  right  to  appW ;- 

Senator  Foster,  of  Louisiana.  To  suspend  the  execution  of  that 
order. 

Mr.  CocKRELL.  To  apply  to  the  courts? 

Senator  Foster  of  Louisiana.  During  the  pendency  of  the  appeal. 

^[r.  CocKRELL.  To  suspend  that  operation? 

Senator  Foster  of  Louisiana.  To  suspend  that  order. 

Mr.  CocKREi.E.  I  do  not  think  there  would  be  anj-  necessity  of  men- 
tioning a  thing  of  that  kind  in  the  law. 

Senator  Newi-ands.  You  think  the  courts  would  have  jurisdiction 
to  do  it  anyway? 

Mr.  CocKRF.EL.  I  think  the  courts  clearly  have  jurisdiction,  and  if 
the  rate  fixed  by  the  Commission  was  snch  a  rate  as  would  result  in 
great  and  speedy  harm  to  them,  they  could  get  out  an  injunction. 
You  must  remember  that  they  have  twenty  or  thirty  days  before  the 
rate  goes  into  effect  after  it  has  been  ordered  by  the  Commission. 
Xow,  they  have  that  time  within  which  to  get  out  an  injunction,  ppd 
if  it  was  a  case  where  they  would  have  no  remedy,  and  they  had  col- 
lected the  small  rate  and  could  not  collect  the  other,  and  they  should 
show  clearly  that  what  the  Commission  had  done  was  an  irreparable 
wrong,  the  court  would  suspend  it  until  the  court  could  hear  the 
question. 

I  do  not  think  there  is  any  question  but  what  the  court  would  do 
that.  It  ought  to  do  it.  I  do  not  think  it  would  be  necessary  to  make 
a  restriction  of  that  kind  in  the  laAV.  Xow,  in  addition,  I  would  make 
the  railroads  responsible  for  everything  transported  on  their  lines, 
the  private  cars  and  priA^ate  car  lines  and  everything,  and  would  make 
them  report  to  the  Commission  just  as  they  do  now,  the  rates  for 
everj'thing.  They  report  some  things  now.  I  would  make  tliera 
report  everj^thing,  the  rates  for  icing  and  everything  of  that  kind. 
I  think  the  railroads  ought  to  be  responsible  for  it.  There  was  a  time 
Avhon  the  fruit  interests  and  various  things  of  the  kind  had  not 
developed,  when  it  was  a  new  matter,  and  it  would  have  been  a  great 
expense  to  the  railroads  to  furnish  all  the  cars  at  once,  but  that  time 
has  passed.  The  industry  has  been  developed.  Take  the  imnxense 
freightage,  for  instance,  that  comes  from  California  and  from  Mich- 
igan and  from  the  South,  and  all  around,  in  the  fruit  season. 

These  private  car  lines  can  be  absorbed  by  the  railroads,  and  now 
with  the  knowledge  they  have  the  railroads  can  furnish  the  cars  for 
this  service  and  one  line  can  exchange  with  another,  just  as  they 
exchange  cars  now,  under  similar  regulations  that  they  can  estnblish. 
Probably  they  have  cars  enough,  if  properly  distributed,  to  carry  the 
various  products  of  that  kind.  They  will  have  to  increase  the  num- 
ber of  them,  and  the  railroads  ought  to  do  it,  just  as  the  Michigan 
Central  has  already  clone.  The  Michigan  Central  has  refused  to  re- 
ncAv  its  contracts  with  the  Armour  Car  Lines,  and  the  Pere  Mar- 
quette road  will  refuse  to  renew  its  contract,  which  expires  in  Sep- 
tember next.  I  understand  there  are  several  railroads  in  the  country 
that  own  their  own  cars  of  this  sort — that  is,  they  have  a  corporation 
composed  of  their  oAvn  company,  and  the  railroad  company  owns  all 


EEGULATION    OF   EAILWAY   KATES.  219 

the  stock  in  this  corporation,  and  as  a  matter  of  course  I  suppose 
the}'  ought  not  to  dispute  that  thej^  are  liable,  but  it  is  a  serious  ques- 
tion now  as  to  whether  some  of  these  companies  are  liable  or  not.  It 
is  claimed  that  there  have  been  very  great  outrages  perpetrated,  that 
extortionate  charges  have  been  made  for  icing  and  the  transportation 
of  things  of  that  kind. 

Senator  Clapp.  Then  your  suggestion  that  the  carriers  be  held  re- 
sponsible for  the  icing  charges  is  a  matter,  as  !■  understand  you,  that 
involves  the  abolishing  of  the  private  car  lines? 

Mr.  CocKRELL.   Well,  I  do  not  know,  Senator.     That  is  a  question. 

Senator  Clapp.  I  was  getting  your  view  of  it. 

Mr.  CocKRELL.  I  sa}^  I  do  not  know  whether  I  would  undertake,  in 
the  law,  to  declare  that  they  should  be  abolished  and  not  permitted  to 
continue,  because  there  is  a  great  deal  of  property  invested  in  some  of 
these  car  lines  and  there  ought  to  be  no  injustice  done  them.  They 
are  getting  a  very  reasonable  compensation  for  the  value  of  their  cars 
in  the  rates  paid  by  the  railroads  for  their  use;  but  I  think  it  is  a 
vicious  system  that  has  grown  up  because  of  the  necessities  of  the 
business  in  the  past,  and  that  now  it  is  time  to  end  it  and  make  the 
railroads  responsible  for  it,  or  that  they  must  arrange  with  these 
private  car  companies  in  such  a  way  as  to  make  them  responsible  for 
the  icing  and  for  all  the  charges  connected  with  the  service — that  is, 
to  make  the  railroads  so  responsible,  and  let  them  settle  with  the 
private  car  companies.  I  do  not  think  they  will  have  a  great  deal  of 
trouble  in  settling  that.  A^Tienever  it  is  so  that  they  are  under  con- 
trol I  think  they  will  be  able  to  settle  it  without  any  very  great  wrong 
being  done. 

Senator  Clapp.  Would  not  that  leave  a  very  wide  opportunity  for 
a  form  of  discrimination  that  would  be  very  difficult  to  get  at  and 
detect,  if  men  or  companies  could  own  these  private  car  lines  and 
they  themselves  be  engaged  in  the  business  of  producing  and  distribut- 
ing those  products  which  the  carrier  was  theretofore  carrying? 

Mr.  CocKRELL.  You  are  right  about  that ;  there  is  no  doubt  about 
it.  They  have  held  up  many  a  railroad  in  this  country  and  made 
them  make  contracts  with  them.  They  have  the  power  to  do  it,  and 
in  some  instances  I  have  been  told  they  have  said :  "  Here,  we  have 
got  to  have  certain  rights  or  our  products  don't  go  in  them  over  your 
line."  I  would  not  allow  any  private  car  owner  to  have  any  right 
of  control  of  the  cars  which  were  used  by  the  railroads.  The  rail- 
roads must  have  absolute  control  and  must  make  no  discrimination 
in  favor  of  the  owners  of  the  cars. 

Senator  Xewlands.  The  only  right  of  the  owner  of  the  car  would 
be  to  have  compensation  for  the  use  of  his  car? 

Mr.  CocKRELL.  For  the  use  of  his  car,  and  he  can  be  placed  on  an 
absolute  footing.  If  he  is  not,  the  same  trouble  you  speak  of  will 
continue.  If  they  are  allowed  to  put  their  products  in  in  preference 
to  everj^body  else,  why,  it  will  give  them,  as  a  matter  of  course,  a 
preference  and  be  a  discrimination. 

Senator  Clapp.  Does  not  the  mere  relationship  there 

Mr.  CocKRELL.  That  is  true.  I'  make  this  recommendation,  that  if 
there  were  no  cars  existing  and  there  were  no  property  interests 
involved,  I  would  say  what  you  do  in  that  matter;  but  there  is  to 
be  a  transition,  and  sometimes  it  is  not  best  for  them  to  be  sudden  and 
instantaneous.     Now,  if  you  make  the  railroads  responsible  for  the 


220  KEGULATION    OF   RAILWAY   RATES. 

cars  and  everything  connected  with  them,  and  only  give  them 
authorit}^  to  lease  the  cars  if  they  want  to — but  they  must  have 
control  and  must  not  give  preference  to  anyone  regardless  of  whether 
he  is  an  owner  or  not,  in  the  products  they  carry — I  think  that  will 
remedy  it,  and  the  railroads  will  absorb  them  in  a  very  short  time. 

Senator  Neavlands.  Can  not  that  transaction  of  the  lease  of  the 
cars  themselves  be  made  the  record  for  some  discrimination  or  rebate 
of  the  owner  of  the  car  who  would  be  engaged  in  selling  products? 

Mr.  CocKRELL.  I  do  not  see  how  it  could  without  being  a  violation 
of  the  law. 

Senator  Newlands.  It  might  be  difficult  to  get  at,  that  is  all. 

Mr.  CocKRELL,  There  are  a  great  many  things  that  have  to  be 
transported  in  special  cars,  particularly  fruit,  and  it  is  a  very  large 
business,  also  vegetables  and  perishable  products,  and  it  is  a  great 
benefit  to  the  company,  and  it  enables  people  of  every  portion  of  the 
country  to  have  the  products  of  every  other  portion  at  a  reasonable 
price. 

Senator  Cullo3i.  And  we  all  get  the  best  there  is. 

Mr.  CocKRELL.  Yes;  and  some  of  the  charges  have  been  pretty 
high. 

Senator  Kean.  Some  of  the  charges  at  some  of  the  dining  stations 
of  the  railroads  are  pretty  high  too,  Senator,  for  the  passengers. 
To  get  your  dinner  at  some  of  the  dining  stations  costs  a  good  deal. 

Mr.  CocKRELL.  I  do  not  think  there  is  any  comparison  between 
that  and  the  subject  about  which  we  are  talking.  Between  the  dining 
room  at  the  side  of  a  track  where  a  train  stops  and  the  icing  of  a 
through  product  from  one  point  to  another,  where  it  has  to  be  iced 
here,  and  there,  and  there,  I  do  not  think  there  is  any  comparison. 

Senato'r  Kean.  But  that  is  the  food. 

Mr.  CocKRELL.  That  is  a  part  and  parcel  of  the  transportation. 
That  car  has  to  be  given  it  in  order  to  transport  it. 

Senator  Kean.  But  that  is  a  part  of  your  transportation,  too. 
You  would  feel  uncomfortable  if  you  could  not  get  something  to  eat. 

Mr.  CocKRELL.  Well,  of  course  I  do  not  think  there  is  any  com- 
I^arison  between  an  eating  station  where  people  are  free  to  come  and 
go,  or  not.  just  as  they  choose,  and  something  which  has  to  be  done 
to  the  product  while  it  is  still  on  the  cars  and  in  course  of  transpor- 
tation. I  think  that  is  a  very  clear  distinction  to  make,  and  I  think 
the  courts  would  do  it  if  it  was  ever  to  come  before  them. 

Senator  Keax.  Then  you  distinguish  between  the  inanimate  and 
animate  ? 

Mr.  CocKREix.  I  do  not  know.  There  is  some  difference  between 
them  anyway,  whether  I  think  it  or  not.  As  I  said,  I  have  come  to 
this  conclusion  because  I  believe  it  would  be  for  the  best  interests  of 
all  the  people — those  who  produce  these  commodities  that  are  to  be 
transported  and  to  the  people  who  consume  these  products  and 
make  a  market  for  them  and  of  the  railroads  and  of  our  whole  coun- 
try and  the  business  interests  of  the  country. 

Xow,  I  came  to  this  conclusion  after  looking  at  the  Commission 
in  the  first  place.  How  was  it  appointed?  Selected  by  the  Presi- 
dent from  the  people  of  the  whole  United  States,  confirmed  by  the 
Senate,  and  has  no  power  except  the  power  which  has  been  delegated 
to  the  Commission  by  the  Congress.  Now,  I  think  that  when  the 
President  of  the  United  States  has  made  a  selection  and  the  Senate 


REGULATION    OF   RAILWAY   RATES.  221 

has  confirmed  those  men  that  we  may  reasonably  infer  that  they  are 
honest;  that  they  are  intelligent;  that  they  are  patriotic;  and  that 
they  have  at  heart  the  best  interests  of  all  the  people  of  the  United 
States;  and  that  in  the  administration  of  their  offices  they  would 
hear  all  cases  and  decide  them  fairly  and  impartiallj'',  and  aim  not 
to  do  anything  that  would  be  unreasonable  or  unjust  or  that  would 
be  a  wrong  to  any  portion  of  our  country. 

Now,  does  not  the  past  justify  this  judgment  of  a  commission? 
You  have  had  the  Commission  since  1887.  A  complaint  is  made  that 
a  rate  is  unreasonable  or  discriminatory  or  in  violation  of  law,  and 
that  is  reduced  to  a  formality  if  it  is  not  in  proper  shape,  so  that  the 
railroads  can  know  exactly  what  is  charged  against  them. 

Now,  the  railroads  are  notified  of  that  charge  which  has  been  made 
against  them,  and  they  are  allowed  a  reasonable  time  within  which 
to  answer  it,  and  they  answer  it  under  oath,  and  thej'^  make  their  de- 
fense as  best  they  can.  Now,  then,  the  Commission,  after  that  is 
done,  appoint  a  time  and  place  for  a  hearing,  and  before  that  Com- 
mission come  all  these  freight  agents  and  all  the  traffic  managers, 
and  they  get  all  the  facts  that  they  can,  and  the  Commission  takes 
page  after  page  of  evidence.  These  men  are  cross-questioned  by  the 
lawyers  representing  the  railroads,  and  you  must  confess  that  they 
are  gentlemen  of  great  abilities  and  attainments.  They  are  cross- 
questioned  by  them  in  order  to  present  the  case  in  the  best  possible 
form,  and  the  complainants  are  heard  from  the  record  as  to  the 
charges. 

Now,  here  is  a  case  where  the  Commission  has  to  decide  whether 
that  is  a  reasonable  rate  or  not.  It  takes  into  consideration  every- 
thing that  any  freight  trafficker  has  named.  It  takes  into  considera- 
tion the  rates  that  have  existed  for  years  and  years  past  on  that  line, 
and  the  rates  that  have  existed  on  similar  lines,  and  the  character  of 
the  products,  the  place  where  the  products  originate,  the  place  to 
which  they  are  destined,  and  everything  which  could  have  any  weight 
or  consideration  by  a  freight  trafficker  is  brought  before  the  Commis- 
sion, and  the  Commission  is  fully  informed  in  the  matter.  Then 
they  make  their  decision.     This  has  been  going  on  ever  since  1887. 

Now.  what  have  been  the  results?  Is  not  the  railroad  business 
in  this  country  in  better  condition  to-day  than  it  ever  was  before, 
in  ever}^  sense  of  the  word,  and  in  the  contentment  and  satisfaction 
of  the  people  ?  It  is  said  that  this  Commission  has  failed ;  that  it  has 
been  overruled  and  reversed  in  the  courts.  Now,  let  us  examine  that 
phase,  and  I  will  detain  you  but  just  a  few  seconds  on  that  point. 
I  think  that  we  should  understand  it  exactly.  I  believe  all  the  mem- 
bers of  that  Commission  have  been  lawyers  except  one.  And  one,  I 
think,  was  selected  because  he  was  a  railroad  man.  Now,  I  must  say 
to  you  frankly  that  if  I  were  President  of  the  United  States  and  mak- 
ing the  selection  I  would  not  want  any  traffic  manager  or  any  rail- 
road man  on  that  Commission.  I  would  not  want  an}^  man  whose 
judgment  might  be  biased  any  way  by  his  previous  training  nnd 
service.  You  do  not  pick  judges  out,  who  have  to  pass  upon  these 
railroads,  because  they  have  been  freight  traffic  managers  or  anything 
of  the  kind,  and  they  are  the  ones  who  have  to  finally  pass  upon  this 
whole  matter.    They  are  not  selected  because  of  that. 

Now,  let  us  examine  some  of  the  cases  that  have  gone  to  the  courts. 
I  will  take  the  case  of  the  Interstate  Commerce  Commission  >■.  The 


222  EEGULATIOX    OF    RAILWAY   RATES. 

Detroit  and  Grand  Haven  Railroad  (167  U.  S.).  In  that  case  the 
United  States  circuit  court  for  the  western  district  of  Michigan  sus- 
tained the  decision  of  the  Commission,  and  the  United  States  circuit 
court  of  appeals  and  the  United  States  Supreme  Court  reversed  the 
decision  of  the  circuit  court.  That  shows  that  the  judicial  mind  had 
not  been  unanimous  in  overruling  the  decisions  of  the  Commission, 
because  here  was  a  circuit  judge  that  sustained  the  decision  and  then 
the  court  of  appeals  and  the  Supreme  Court  reversed  that  judge  and 
reversed  the  Commission. 

Now,  Ave  will  take  the  case  of  the  Florida  Fruit  Exchange  r.  The 
Savannah,  Florida  and  Western  Railroad  (167  U.  S.).  The  decisions 
of  the  Interstate  Commerce  Commission  were  sustained  by  the  United 
States  circuit  court  for  the  southern  district  of  Florida  and  also  by 
the  circuit  court  of  appeals,  and  the  United  States  Supreme  Court  re- 
versed both  of  them.  I  think  the  Commission  is  in  prettj^  good  com- 
pany there.  It  decided  the  case,  the  United  States  circuit  court  and 
the  circuit  court  of  appeals  sustained  the  decision,  and  the  Supreme 
Court  reversed  the  whole  thing. 

Well,  now,  we  will  take  another  case,  that  of  the  Interstate  Com- 
merce Commission  i\  The  Texas  and  Pacific  Railway  Company  (162 
U.  S.).  The  decision  of  the  Commission,  in  the  circuit  court  for  the 
southern  district  of  New  York — and  there  are  supposed  to  be  great 
lawA^ers  and  jurists  there — was  sustained,  and  on  appeal  to  the  court 
of  appeals  that  decision  was  affirmed ;  and  the  Supreme  Court  of  the 
United  States  reversed  both  of  them. 

Now,  then,  in  the  case  of  Behlman  v.  The  Louisville  and  Nashville 
Railroad  (169  U.  S.)  the  decision  of  the  Interstate  Commerce  Com- 
mission in  the  circuit  court  in  the  South  Carolina  district  was 
reversed.  The  Commission  was  overruled  bj^  the  circuit  court  of  the 
district  of  South  Carolina,  and  on  appeal  to  the  circuit  court  of 
appeals  the  Interstate  Commerce  Commission's  decision  was  sus- 
tained, and  then  on  appeal  to  the  Supreme  Court  the  court  of  appeals 
was  reversed. 

Senator  Cullom.  "\Miat  became  of  the  Commission?  Were  they 
reversed,  too? 

Mr.  CocKRELL.  They  were  reversed,  too.  But  you  will  notice  the 
conflict  of  the  judicial  mind  on  these  intricate  questions. 

Now,  I  come  to  the  Colorado  Fuel  and  Iron  Company  v.  The 
Southern  Pacific.  In  that  case  the  order  of  the  Interstate  Commerce 
Commission  was  sustained  by  the  United  States  circuit  court  for  the 
district  of  Colorado,  and  the  United  States  circuit  court  of  appeals, 
April  6,  1900,  reversed  the  decision  of  the  circuit  court.  The  case 
did  not  go  any  further. 

Now,  in  the  East  Tennessee  and  Georgia  Railroad  Company  v. 
The  Interstate  Commerce  Commission  (181  U.  S.)  the  circuit  court 
for  the  eastern  district  of  Tennessee  affirmed — and  I  want  to  call 
the  special  attention  of  the  committee  to  this  case — affirmed  the  de- 
cision of  the  Interstate  Commerce  Commission.  And  on  appeal  to 
the  United  States  circuit  court  of  appeals  that  decision  was  affirmed, 
and  on  that  circuit  court  of  appeals  was  Judge  Taft,  the  present 
Secretary  of  War,  and  Judge  Lurton,  and  Mr.  Justice  Harlan,  of 
the  Supreme  Court.  Now,  then,  that  case  was  taken  to  the  Supreme 
Court  and  by  the  Supreme  Court  was  reversed. 

Now,  it  seems  to  me,  if  you  analyze  these,  the  decisions  of  the  Inter- 


EEGULATION    OF    EAILWAY   RATES.  223 

state  Commerce  Commission  have  been  about  as  well  sustained  as 
the  decisions  of  the  district  and  circuit  courts,  and  even  the  court  of 
appeals. 

Senator  Cullom.  As  many  judges  deciding  for  the  question  as  there 
were  those  deciding  against  it? 

Mr.  CocKRELL.  Yes ;  and  they  have  been  from  all  over  the  country. 
Now,  in  this  process  there  is  a  kind  of  a  law  being  established 
throuii'hout  the  country. 

Senator  Dolliver.  Has  the  Supreme  Court  been  unanimous  in  all 
of  these  cases? 

Mr.  CocKRELL.  No:  they  have  not  been  unanimous  at  all.  In  one 
cfise,  although  I  am  not  certain,  there  were  three  judges  who  dissented. 

Now.  I  want  to  come  to  one  case,  that  of  The  Interstate  Commerce 
Commission  r.  The  Louisville  and  Nashville  Railroad.  The  order  of 
the  Commission  was  sustained  by  the  United  States  circuit  court  for 
the  southern  district  of  Georgia.  In  this  case  a  multitude  of  points 
were  involved.  In  the  first  place  there  was  complaint  against  the 
rate  on  cotton,  turpentine,  and  rosin,  and  other  property  convej^ed  by 
the  Louisville  and  Nashville  Railroad  from  stations  in  Florida  to 
Savannah.  Then  there  were  charges  in  regard  to  rates  on  bacon  and 
other  freights,  groceries  and  hardware,  etc.,  transported  from  Savan- 
nah to  Pensacola  and  Atlantic  points,  and  there  were  charges  as  to 
the  rates  on  all  the  lines  from  New  York  to  Pensacola  and  the 
Atlantic  division  on  general  articles  of  freight,  but  especially  on 
sugar. 

Now,  there  were  divers  railroads  and  clivers  charges  submitted 
to  the  Commission,  and  the  Commission  was  called  on  to  decide  that 
case.  It  has  been  intimated  that  with  the  contrariety  of  business, 
and  those  things,  the  Commission  might  throw  everything  into  con- 
fusion by  having  so  much  before  it.  I  want  to  read  just  a  little. 
Y^ou  have  this  report  here,  but  I  want  to  call  attention  to  it.  In 
the  first  place,  the  Interstate  Commerce  Commission  decided,  after 
having  all  the  railroads,  all  the  traffic  managers,  and  all  the  attorneys 
in  presenting  the  evidence  and  in  presenting  the  contracts,  that  the 
rates  on  sugar  and  other  products  from  New  York  to  Pensacola  and 
other  i^tlantic  jjoints  were  not  in  violation  of  the  law,  and  then  they 
decided  that  the  rates  on  bacon  and  other  articles  from  Savannah  to 
Pensacola  and  other  points  were  not  seriously  wrong,  and  they  dis- 
missed the  charges  against  the  sundry  railroads  as  to  those  two 
charges.  And  then  they  decided  as  to  the  rates  on  cotton,  turpentine, 
rosin,  and  other  articles  from  stations  in  Florida  to  Savannah. 
Now,  I  will  read  what  the  Commission  say  in  regard  to  that: 

The  Commission  found  that  the  rate  on  uncompressed  cotton  from  stations  in 
Florida  on  the  Pensacola  and  Atlantic  division  to  Savannah  was  $2.75  per  bale 
at  the  time  of  hearing.  When  complaint  was  filed  and  for  some  years  prior 
thereto,  but  subsequent  to  the  hearing,  this  rate  had  been  increased  55  cents, 
to  $.3.30  per  bale.  The  rates  from  the  same  points  to  Mobile  and  New  Orleans 
had  been,  and  were  at  the  time  of  the  decision,  respectively,  $2  and  $2.50  per 
bale.  The  Commission  held  that  the  rate  of  $2.75  to  Savannah  was  not  unlaw- 
ful, but  that  the  whole  advance  of  55  cents  was  unlawful,  and  that  any  higher 
rate  on  such  cotton  to  Savannah  than  the  former  difference  of  25  cents  per 
bale  alwve  the  rate  in  force  from  the  same  stations  to  New  Orleans  violated 
sections  1  and  3  of  the  statute.  The  Louisville  and  Nashville  made  certain  local 
rates  on  rosin  and  turpentine  from  stations  on  its  Pensacola  and  Atlantic  divi- 
sion in  Florida  to  Pensacola,  Fla.,  and  had  joined  with  connecting  carriers  in 
making  certain  through  group  rates  from  the  same  stations  to  Savannah.    For 


224  EEGULATio:sr  of  railway  rates. 

its  service  to  the  junction  point,  namely.  River  Junction,  Fla.,  the  Louisville  and 
Nashville  exacted  a  share  of  the  through  joint  rates  to  Savannah  which  greatly 
exceeded  its  purely  local  rates  for  like  distances  to  Pensacola,  while  the  shares 
accepted  by  its  connecting  carriers  were  reasonably  low.  Upon  consideration 
of  all  the  facts  and  circumstances  the  Commission  held  that  the  shares  of  the 
Louisville  and  Nashville  in  the  freight  rates  to  Savannah  were  unreasonable 
and  unjust  under  sections  1  and  3  of  the  act,  in  comparison  with  the  rates  to 
Pensacola. 

The  Commission  further  held  that  rates  on  rosin  and  turpentine  from  such 
Pensacola  and  Atlantic  division  stations  to  Savannah  should  be  adjusted  to  the 
rates  to  Pensacola  by  adding  to  the  local  rates  of  the  Louisville  and  Nashville 
for  the  distance  to  Pensacola  which  is  nearest  to  the  distance  from  each  sta- 
tion to  River  Junction  the  present  share  accepted  by  the  carriers  to  Savannah 
from  River  Junction,  provided  that  on  shipments  of  turpentine  to  Savannah 
from  stations  east  of  Mossy  Head  the  Louisville  and  Nashville  should  have  more 
than  its  local  rates  for  like  distances  to  Pensacola,  and  that  such  rates  should 
be  determined  by  adding  the  rate  of  6  cents  from  Sneads  to  Pensacola,  the  car- 
riers east  of  River  Junction  accepting  their  present  share  from  such  stations 
east  of  Mossy  Head. 

With  respect  to  these  rosin  and  turpentine  rates,  the  Commission  said  in  its 
opinion  that  whatever  difference  may  have  seemed  necessary  at  the  outset  to 
create  a  demand  in  the  Pensacola  market,  it  had  become  apparent  after  several 
years'  trial  that  the  rates  to  Savannah,  as  compai-ed  with  the  Pensacola  rates, 
gave  an  unwarranted  advantage  to  I'ensacola ;  that  in  endeavoring  to  build  up 
the  near-by  market  at  Pensacola,  and  so  furnish  these  products  with  a  :narket 
in  addition  to  the  one  existing  at  Savannah,  the  Louisville  and  Nashville  vas 
acting  in  the  interest  of  producers  of  and  dealers  in  naval  stores  on  its  Pensa- 
cola and  Atlantic  division,  but  that  it  had  so  adjusted  rates  as  to  give  Pensacola 
a  practical  nionopoly  of  the  trade.  The  Louisville  and  Nashville  claimed  that 
the  lower  scale  of  rates  to  Pensacola  was  necessary  to  hold  the  traffic  for  long 
hauls  on  the  Louisville  and  Nashville  system  to  points  north  and  west  of  Pen- 
sacola. The  Commission  ruled  that  when  a  carrier  makes  rates  ,to  two  com- 
peting localities  which  give  one  a  practical  monopoly  over  the  other  because 
it  can  secure  reshipments  from  the  favored  locality  and  none  from  the  other,  it 
goes  beyond  serving  its  fair  interests  and  disregards  the  statutory  requirement 
of  relative  equality  as  between  persons,  localities,  and  descriptions  of  traffic. 

The  railroad  companies  against  whom  the  order  was  directed  refused  to  gbey 
it,  and  thereupon  the  Commission  brought  suit  to  enforce  its  order  in  the  United 
States  circuit  court  for  the  southern  district  of  Georgia.  That  court,  in  July, 
1902,  rendered  its  decision,  fully  sustaining  the  Commission  and  requiring  the 
enforcement  of  the  various  provisions  of  the  order.  The  carriers  appealed  to 
the  circuit  court  of  appeals,  but  the  appeal  was  never  perfected.  The  president 
of  the  Louisville  and  Nashville  Railroad,  the  general  superintendent  of  the 
second  division  of  the  Atlantic  Coast  Line,  and  the  superintendent  of  the  fifth 
division  of  ihe  Seaboard  Air  Line  were  cited  before  the  court  for  contempt. 
Subsequently,  upon  hearing  in  the  contempt  case,  the  defendants  offered  to  com- 
ply with  the  decree  of  the  court  enforcing  the  order  of  the  Commission,  and 
thereupon,  counsel  for  all  parties  consenting,  a  decree  was  entered  by  the  court 
suspending  the  contempt  proceedings  until  otherwise  ordered.  In  that  decree 
the  railroad  companies  were  granted  leave  upon  substantial  changes  of  the 
circumstances  and  conditions  affecting  the  traffic  to  apply  to  the  court  for  such 
modification  of  its  decree  as  they  might  desire. 

The  defendant  railroad  companies  were  required  to  pay  the  costs  of  the  con- 
tempt proceeding  and  to  refund  to  the  parties  entitled  thereto  any  charges 
collected  by  them  in  excess  of  the  rates  provided  for  in  the  decree  enforcing  the 
order  of  the  Commission. 

Now,  there  is  one  of  the  most  complicated  cases,  involving  various 
interests  and  various  points  and  manv  companies.  The  Commission 
made  a  decision.  Now,  what  happened?  The  companj'  refused  to 
pay.  They  took  an  aj)peal,  but  did  not  perfect  it,  and  when  they 
were  brought  up  for  refusing  to  obey  the  order  of  the  court,  as  they 
had  been  ordered  to  do,  turned  around  and  paid  it.  AYell.  there  was 
no  panic  produced  by  that  thing.  There  was  no  great  wrong  done. 
The  roads  themselves  were  unwilling  to  take  it  to  a  higher  court,  and 
rather  than  perfect  their  appeal  and  prosecute  the  procedings,  they 


EEGULATION    OP    RAILWAY   RATES.  225 

yielded  to  the  decision  of  the  circuit  court.  That  shows  exactly  how 
this  Commission  has  been  proceeding.  Everything  has  been  consid- 
ered, and  I  think  its  work  has  been  eminently  beneficial  to  the  rail- 
roads and  to  the  country.  There  have  been  many  cases  that  have 
been  settled,  many  little  cases,  many  little  irregularities,  where 
amicable  relations  have  been  established  between  the  shipper  and  the 
railroad  company  by  virtue  of  the  action  of  the  Commission. 

I  will  mention  one  little  thing.  A  former  constitutent  of  mine, 
from  Missouri,  living  in  the  strawberry  region,  sent  me  a  bill  that 
he  had  paid.  I  sent  it  down  to  one  of  our  auditors.  He  compared 
it  with  the  rating  and  the  bill  of  rate  or  rates  filed  by  that  railroad 
company,  and  there  was  an  overcharge  of  probably  $56.  I  have 
forgotten  the  exact  amount — do  not  remember  it  exactly.  The  com- 
pany was  notified  that  this  overcharge  existed.  Now,  as  a  matter 
of  course,  that  party  could  have  gone  into  court,  and  there  is  no 
doubt  he  could  have  shown  a  clear  violation  of  the  law.  The  Com- 
mission hunted  the  matter  up,  and  they  settled  it.  They  imme- 
diately advised  me  they  would  have  the  matter  looked  uj),  and  it  was 
done. 

Senator  Cullom.  "Who  hunted  it  up? 

Mr.  CocKRELL.  The  railroad  conipany.  He  could  have  gone  to 
court  and  harassed  the  railroad  company  if  he  had  wanted  to  do  so, 
but  he  would  have  been  compelled  to  pay  the  cost,  for  it  was  a  clear 
error. 

I  find,  in  looking  over  the  reports  and  decisions  of  the  Commission, 
that  that  has  been  the  general  rule,  and  that  many  cases  have  been 
decided,  and  many  cases  have  decided  where  damages  were  assessed 
by  the  Commission,  and  the  railroads  have  paid  them  rather  than  to 
go  into  further  litigation.  I  believe  that  it  is  to  the  very  best  inter- 
ests of  the  railroads  that  this  power  shall  be  delegated  and  the  ques- 
tion settled,  and  that  there  will  not  be  any  abuse  of  power  in  a  Com- 
mission selected  hj  the  President  and  confirmed  by  the  Senate,  fol- 
lowing the  precedents  that  have  been  established  by  the  Commission 
itself  and  by  the  decisions  of  the  courts. 

Senator  CmLLOM.  You  mean  that  there  will  be  no  danger  to  the 
railroads  ? 

Mr.  CocKRELL,  No  danger  to  anybody.  I  believe  it  will  be  pro- 
motive of  good.  I  believe  it  will  be  to  the  interests  of  the  railroads, 
and  that  they  will  thank  Congress  inside  of  twelve  or  eighteen 
months  for  having  delegated  that  authority  to  the  Commission. 

The  Chairman.  The  committee  desires  to  thank  the  members  of 
the  Commission  for  their  attendance  and  the  statements  which  they 
have  presented. 

Senator  Newlands.  Before  the  Commission  leaves,  I  would  ask,  do 
I  understand  that  they  are  to  submit  to  the  committee  amendments 
that  they  would  suggest  to  this  bill,  and  among  other  things  I  would 
call  their  attention  to  this  division  of  the  powers  of  the  Commission, 
either  into  two  branches  of  the  same  Commission  or  segregation  to 
some  other  Department. 

74lA— 05 15 


APPENDIX    G-. 


BEFORE  THE  INTERSTATE  COMMERCE  COMMISSION— IN  THE  MATTER 

OF  THE  TRANSPORTATION  OF  DRESSED  MEATS  AND 

PACKING-HOUSE  PRODUCTS-ORDERS 

AND  TESTIMONY. 


227 


BEFORE  THE  INTERSTATE  COMMERCE  COMMISSION. 

IN  THE  MATTER  OF  THE  TRANSPORTATION  OF  DRESSED  MEATS 
AND  PACKING-HOUSE  PRODUCTS. 


At  a  general  session  of  tbe  Interstate  Commerce  Commission,  held 
at  its  office  in  Washington,  D.  C,  on  the  12th  day  of  March,  A.  D.  1901. 

Present:  Hon.  Martin  A.  Knapp,  chairman,  Hon.  Judson  C.  Clem- 
ents, Hon.  James  D.  Yeomans,  Hon.  Charles  A.  Prouty,  Hon.  Joseph 
W.  Fifer,  Commissioners. 

IN  THE  MATTEE  OF  THE  TRANSPORTATION  OF  DRESSED  MEATS  AND  PACKING- 
HOUSE PRODUCTS. 

Ordered,  That  a  proceeding  of  investigation  and  inquiry  into  the 
manner  and  method  in  which  carriers  subject  to  the  act  to  regulate 
commerce  conduct  and  manage  tbp.ir  business  with  respect  to  rates, 
facilities,  and  practices  applied  in  tne  transportation  of  dressed  meats 
and  packing-house  products  from  Kansas  City  in  the  State  of  Missouri 
and  Omaha  in  the  State  of  Nebraska  and  other  points,  called  and  known 
as  Missouri  River  points,  to  eastern  destinations  be  and  is  hereby  insti- 
tuted, and  that  tbe  matters  involved  in  such  proceeding  be,  and  the 
same  are  hereby,  set  down  for  hearing  before  the  Commission  on  the 
21st  day  of  March,  1901, 10  o'clock  a.  m.,  at  United  States  court  rooms, 
Kansas  City,  Mo.,  the  said  hearing  to  be  continued  at  such  other  times 
and  places  as  may  appear  to  be  required. 

BEFOEE  THE  INTERSTATE  COMMERCE  COMMISSION. 

m  THE  MATTER    OF   THE  TRANSPORTATION   OF   DRESSED   MEATS   AND  PACKING- 
HOUSE PRODUCTS. 

Hearing  at  Kansas  City,  3Io.,  March  21,  1901,  10  o'clock  a.  m. 
Present:  Commissioners  Clements,  Yeomans,  Prouty,  and  Fifer. 
W.  A.  Day  and  J.  T.  Marchand  for  the  Commission. 

INDEX. 

Page. 

Barnard,  T.  J 277 

Collister,  J.  J 271 

Everest,  W.  E 279 

Gault,  F.  M 259 

Gavin,  J.  E 280 

Golden,  H.  C 267 

Harvey,  William : 284 

Hitchins,  E.  S 230 

Hurd,  D.  F 246 

Kresky,  D.  H '. 283 

Lund,  J.  D 286 

McAllister,  S.  D 278 

McKone,  W.J 257 

Marshall,  W.  N 260 

Shannon,  J.  A 283 

229 


280  APPENDIX   O. 

Commissioner  Clements.  Gentlemen,  we  are  here  to  proceed  with  an 
inquiry,  under  an  order  recently  made  by  the  Commission,  into  the  man- 
ner and  method  by  which  carriers  subject  to  the  act  to  regulate  com- 
merce conduct  and  manage  their  business  with  respect  to  rates,  facilities, 
and  practices  applied  in  the  transportation  of  dressed  meats  and  pack- 
inghouse  products  fi om  Kansas  City,  in  the  State  of  Missouri,  and 
Omaha,  in  the  State  of  Nebraska,  and  other  points  called  and  known 
as  Missouri  Kiver  points,  to  Eastern  destination.  Mr.  Day  will  con- 
duct the  examination  of  witnesses.    Who  will  you  call,  Mr.  Day? 

Mr.  Day.  I  think  we  will  present  Mr.  E.  S.  Hitchins. 

E.  S.  HiTCHrNS,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  Mr.  Hitchins,  you  are  the  local  agent  at  Kansas  City  for 
the  Chicago  Great  Western  Railway? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  What  is  your  relation? 

Mr.  Hitchins.  I  am  the  agent. 

Mr.  Day.  There  is  a  local  agent  independent  of  you? 

Mr.  Hitchins.  Yes,  sir. 

Mr.  Day.  What  is  the  scope  of  your  work? 

Mr.  Hitchins.  I  represent  the  freight,  passenger,  and  transportation 
departments  in  Kansas  City. 

Mr.  Day.  For  the  Chicago  Great  Western  ? 

Mr.  Hitchins.  For  the  Chicago  Great  Western  Railway. 

Mr.  Day.  How  long  have  you  sustained  that  relation? 

Mr.  Hitchins.  About  three  years — it  will  be  three  years  the  1st  of 
une. 

Mr.  Day.  Has  it  been  part  of  your  work  to  secure  shipments  of  dressed 
beef  and  packing-house  products  by  your  line? 

Mr.  Hitchins.  No,  sir;  not  directly.  It  is  part  of  my  duty  to  see 
that  we  get  our  share  of  all  business  out  of  Kansas  City. 

Mr.  Day.  Have  you  done  any  contracting  for  the  transportation  of 
packing-house  products? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  At  any  time  during  the  past  year? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  Have  you  made  any  arrangements  with  any  shipper  of 
packinghouse  products  during  the  past  year? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  Have  you  had  any  conversation  respecting  the  rates  on 
packing-house  products  out  of  Kansas  City  during  the  past  year? 

Mr.  Hitchins.  I  do  not  understand  that  question. 

Mr.  Day.  Have  you  made  any  contract  or  arrangement? 

Mr.  Hitchins.  I  have  answered  that.  If  you  ask  if  I  have  had  any 
conversation  in  regard  to  rates 

Mr.  Day.  Yes. 

Mr.  Hitchins.  Yes;  it  is  a  matter  of  common  gossip. 

Mr.  Day.  With  the  freight  men  of  the  packers. 

Mr.  Hitchins.  No,  sir;  with  the  general  pubhc,  newspaper  men, 
other  railroad  men,  and  fast  freight  line  men. 

Mr.  Day.  You  have  made  no  arrangements  or  propositions  for  the 
transportation  of  packing-house  products  with  Mr.  Ellis? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  Mr.  Davis? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  Mr.  McKone? 


APPENDIX    G. 


231 


Mr.  HiTOHTNS.  No,  sir. 

Mr.  Day.  ISTone  of  the  traffic  men  of  the  packers! 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  Or  their  agents? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  Or  Mr.  Machett? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  You  have  had  no  conversation  with  any  of  those  gentle- 
men in  regard  to  the  transportation  of  packing  house  jjroducts? 

Mr.  HiTCHiNS.  1  may  have  had  conversations  with  regard  to  it,  but 
I  have  not  talked  to  them  about  making  arrangements,  either  directly 
or  indirectly,  in  regard  to  the  rates.  Of  course,  I  had  conversations 
with  them.  I  have  charge  of  the  transportation  department,  and  I 
have  had  considerable  talk  with  them  in  regard  to  getting  out  on  time, 
icing,  etc. 

Mr.  Day.  You  say  you  have  charge  of  the  transportation  department. 
Who,  now,  is  the  individual  who  quotes  the  rates  over  your  line,  or  has 
done  it  during  the  last  six  months  or  a  year? 

Mr.  HiTCHiNS.  On  packing-house  products? 

Mr.  Day.  Yes ;  or  dressed  beef. 

Mr.  HiTCHiNS.  I  do  not  know  who  does  it. 

Mr.  Day.  Who  has  the  authority  to  do  it?  You  know  your  own  force 
or  the  force  of  the  Chicago  Great  Western. 

Mr.  HiTCHiNS.  There  is  no  one  in  Kansas  City  representing  the  Great 
Western  road  that  has  authority  to  quote  anything  but  the  published 
rate. 

Mr.  Day.  Who  makes  contracts  for  the  transportation  to  North 
Atlantic  ports,  say  New  York,  in  which  the  Chicago  Great  Western 
participates  in  the  haul? 

Mr.  HiTCHiNS.  I  do  not  know. 

Mr.  Day.  Who  has  done  that  in  the  past  six  months? 

Mr.  HiTCHiNS.  I  do  not  know. 

Mr.  Day.  When  traffic  is  transported  by  your  line  in  part,  destined 
for  New  York,  crossing  the  Mississippi  River  at  the  north  crossings,  or 
any  of  them,  how  is  that  traffic  billed? 

Mr.  HiTCHiNS.  Destined  to  New  York? 

Mr.  Day.  Yes,  sir. 

Mr.  HiTCHiNS.  It  may  be  billed  to  the  final  destination  on  our  line 
or  it  may  be  billed  to  a  station  on  an  Eastern  line.  I  understand  as 
"  billed"  you  mean,  how  is  it  waybilled. 

Mr.  Day.  How  is  the  bill  of  lading  issued  ? 

Mr.  HiTCHiNS.  It  usually  reads  "  through." 

Mr.  Day.  From  here  to  point  of  destination? 

Mr.  HiTCHiNS.  Pinal  destination. 

Mr.  Day.  When  the  traffic  is  destined  for  local  consumption  at  New 
York,  say,  is  the  bill  of  lading  ever  taken  up  and  a  through  bill  beyond 
issued  in  its  place? 

Mr.  HITCHINS.  We  do  not  issue  any  thrbugh  bills.  Do  you  mean 
export  bills  ? 

Mr.  Day.  Yes,  sir. 

Mr.  HiTCHiNS.  We  do  not  issue  any. 

Mr.  Day.  You  issue  bills  up  to  the  Atlantic  port,  New  York? 
Mr.  HITCHINS.  Yes,  sir. 

Mr.  Day.  When  that  traffic  is  destined  for  foreign  shipment  who 
executes  the  through  bill  to  Liverpool,  or  wherever  it  may  be  destined 
abroad? 


232  APPENDIX   G. 

Mr.  HiTCHiNS.  We  have  nothing  to  do  with  that.  I  nnderstand  in 
a  general  way  tliat  they  malie  a  through  bill  from  Kansas  City  to 
Liverpool,  it  may  be,  issued  here  in  Kansas  City  by  a  fast  freight  line. 
It  may  be  issued  by  a  steamship  man,  but  we  have  nothing  to  do  with 
it,  and  I  do  not  know  really  who  does  issue  the  bill. 

Mr.  Day.  Who  pays  the  freight  charges  on  traffic  destined  for  New 
York  via  your  line? 

Mr.  HiTCHiNS.  That  would  depend  on  circumstances.  If  billed  pre- 
paid, the  shippers  pay;  if  collect,  the  charges  are  collected  at  desti- 
nation. 

Mr.  Day.  What  is  the  general  practice  respecting  packing-house 
products?  What  has  been  the  practice  during  the  last  six  months  in 
that  i^articular? 

Mr.  HiTCHiNS.  A  great  deal  is  billed  prepaid. 

Mr.  Day.  When  billed  prepaid,  who  pays? 

Mr.  HiTCHiNS.  The  shipper  to  the  initial  carrier. 

Mr.  Day.  In  the  case  of  your  line  who  is  it  paid  to — to  you  personally  ? 

Mr.  HITCHINS.  No,  not  to  me  personally. 

Mr.  Day.  To  whom? 

Mr.  HITCHINS.  We  have  collectors. 

Mr.  Day.  Who  are  your  collectors? 

Mr.  HiTCHiNS.  I  do  not  know  who  is  the  collector  now. 

Mr.  Day.  Who  was  your  collector  in  the  month  of  January? 

Mr.  HiTCHiNS.  I  do  not  know  his  name.  He  works  in  the  local 
office.     I  can  not  think  of  his  name.  • 

Mr.  Day.  Who  is  your  collector  to-day? 

Mr.  HiTCHiNS.  I  do  not  know. 

Mr.  Day.  Who  was  your  Collector  last  week? 

Mr.  HiTCHiNS.  The  last  collector  that  I  remember  the  name  of  is 
Kaiser.  We  have  a  young  man  now  who  is  a  member  of  the  Third 
Kegiment.     I  can  get  you  his  name. 

Mr.  Day.  I  want  you  to  bring  after  recess  the  names  of  the  men  who 
have  done  the  collecting  for  you  during  the  past  six  months. 

Mr.  HiTCHiNS.  Yes,  sir. 

Mr.  Day.  ]Sow,  you  say  that  when  the  traffic  is  prepaid  by  the  pack- 
ers or  their  representatives  it  is  paid  into  your  office? 

Mr.  HiTCHiTNS.  Yes,  sir. 

Mr.  Day.  Have  you  had  any  information  that  any  traffic  has  been 
carried  to  New  York  or  Boston  or  Philadelphia  or  Baltimore  originat- 
ing on  your  road  at  Kansas  City  and  that  less  than  the  published  tariff 
has  been  jiaid  on  it? 

Mr.  HiTCHiNS.  No,  sir;  I  do  not  think  so. 

Mr.  Day.  Either  domestic  or  export  shijiments? 

Mr.  HiTCHiNS.  No,  sir;  as  I  understand  it,  there  is  no  tariff  on 
export. 

Mr.  Day.  Well,  how  about  domestic? 

Mr.  HiTCHiNS.  I  know  of  none. 

Mr.  Day.  What  do  you  mean  by  that — that  you  have  collected  the 
full  tariff  rate,  the  published  tariff"  rate,  in  all  instances? 

Mr.  HiTCHiiNS.  Yes,  sir. 

Mr.  Day.  And  finally  retained  it? 

Mr.  HiTCHiNS.  I  have  remitted  it  to  headquarters. 

Mr.  Day.  To  where? 

Mr.  HiTCHiNS.  Our  treasurer. 

Mr.  Day.  Where? 

Mr.  HITCHINS.  At  St.  PauL 


APPENDIX   G.  233 

Mr.  Day.  How  often  do  you  remit  monies  you  collect  to  your  treas- 
urer? 

Mr.  HiTCHiNS.  Every  day.  We  deposit  in  the  National  Bank  ol 
Commerce  here  and  the  treasurer  makes  a  draft  on  the  bank. 

Mr.  Day.  In  any  instances  of  domestic  trallic  have  claims  been 
presented  to  j^ou  by  the  packers  for  a  refund,  a  rebate? 

Mr.  Hitch [NS.  No,  sir. 

Mr.  Day.  On  any  moneys  that  have  been  previously  paid  you? 

Mr.  HiTOHiNS.  No,  sir. 

Mr.  Day.  On  accouut  of  any  previous  shipment? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  No  claims  came  to  you  from  any  source? 

Mr.  HITCHINS.  No,  sir. 

Mr.  Day.  From  line  agents? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  Or  packers? 

Mr.  HITCHINS.  No,  sir. 

Mr.  Day.  Or  any  of  their  representatives? 

Mr.  HITCHINS.  No,  sir. 

Mr.  Day.  Mr.  Fay,  Mr.  Ellis,  Mr.  Machett,  Mr.  McKone— have  none 
of  those  gentlemen  within  the  last  six  months  presented  claims  to  you, 
either  they  or  their  clerks,  for  refunds  on  previous  shipments? 

Mr.  HITCHINS.  No,  sir. 

Mr.  Day.  When  a  refund  is  made  by  your  road  on  account  of  ship- 
ments out  of  Kai)sas  City  during  the  past  six  months  how  is  that  refund 
brought  about? 

Mr.  HiTCHiNS.  1  did  not  know  any  had  been  made. 

Mr.  Day.  You  mean  to  be  understood  as  testifying  without  qualifica- 
tion that  you  have  no  information  of  any  rebates  being  paid  on  packing- 
bouse  products  during  the  past  six  months? 

Mr.  HiTCHiNS.  You  mean  by  rebates,  refunding  down  to  less  than 
tlie  tariff  rate? 

Mr.  Day.  Yes,  sir. 

Mr.  HiTCHiNS.  No;  I  know  of  no  such  transaction. 

Mr.  Day.  Or  by  any  other  m.eans  Hby  which  a  concession  has  been 
made  in  the  tariff,  the  cost  of  the  transportation  of  packing  house  prod- 
ucts or  dressed  beef;  is  that  what  you  mean  to  be  understood  as 
saying? 

Mr.  HITCHINS.  That  is  what  I  mean;  yes,  sir. 

Mr.  Day.  You  say  there  is  no  export  rate? 

Mr.  HiTCHiNS.  I  understand  there  is  no  export  tariff  nublished. 

Mr.  Day.  Have  you  participated — 1  mean  by  "you"— whenever  I 
use  that  term  I  mean  the  Chicago  Great  Western. 

Mr.  HITCHINS.  I  understand. 

Mr.  Day.  Has  the  Chicago  Great  Western  road  participated  in  any 
lower  rate  than  the  domestic  rate  to  New  York  on  trafiic  destined  for 
export? 

Mr.  HiTCHiNS.  I  think  they  have.    I  have  no  doubt  they  have. 

Mr.  Day.  You  think  they  have? 

Mr.  HiTCHiNS.  Yes,  sir. 

Mr.  Day.  At  what  rate  has  it  been  carried  for  export? 

Mr.  HiTCHiNS.  We  get  a  division  of  the  through  rate  to  Liverpool, 
or  wherever  it  is  going,  and  the  export  rate  is  changed  from  time  to 
time. 

Mr.  Day.  What  is  your  division  up  to  the  Mississippi  River  on  the 
New  York  rate? 


234 


APPENDIX   a. 


Mr.  HiTCHiNS.  On  the  published  rate? 

Mr.  Day.  Yes,  sir. 

Mr.  HiTCHiNS.  Eighteen  and  one-half  cents. 

Mr.  Day.  What  was  it  during  the  mouth  of  February  on  traffic  des- 
tined for  export? 

Mr.  HiTCHiNS.  I  do  not  know. 

Mr.  Day.  How  much  did  you  receive  on  traffic  destined  for  export? 

Mr.  HiTOHiNS.  I  do  uot  know. 

Mr.  Day.  In  the  month  of  March? 

Mr.  HiTCHiNS.  I  do  not  determine  those  things  at  all.  I  do  not  know 
anything  about  them. 

Mr.  Day.  At  what  rate  during  February  did  you  carry  traffic  for 
New  York  destined  for  export? 

Mr.  HITCHINS.  I  do  not  know. 

Mr.  Day.  You  do  not  know  anything  about  what  the  export  rate  has 
been? 

Mr.  HITCHINS.  No,  sir;  I  do  not. 

Mr.  Day.  As  a  matter  of  fact,  have  not  you  personally  during  the 
past  three  months  made  engagements  with  some  of  the  packers  at 
Kansas  City  or  their  representatives  to  carry  their  traffic  through  to 
New  York  on  a  concession  of  the  rate  of  your  division  from  Kansas 
City  to  the  Mississippi  Eiver  of  7 J  cents  and,  in  instances,  10  cents? 

Mr.  HiTCHiNS.  I  do  not  understand  the  question. 

Mr.  Day.  I  will  ask  the  stenographer  to  repeat  the  question. 

The  stenographer  repeated  the  question,  as  follows : 

Mr.  Day.  As  a  matter  of  fact,  have  not  you  personally  during  the  past  three  months 
made  engagements  with  some  of  the  packers  at  Kansas  City  or  their  representatives 
to  carry  their  traffic  through  to  New  York  on  a  concession  of  the  rate  of  your  division 
from  Kansas  City  to  the  Mississippi  River  of  7^  cents  and,  in  instances,  10  cents? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  Have  you  made  an  arrangement  of  that  kind  with  any 
line  representative? 

Mr.  HiTCHiNS.  No,  sir;  with  no  one  living. 

Mr.  Day.  You  stated  a  few  minutes  ago  tliat  you  had  carried  traffic 
destined  for  export  at  a  rate  lower  than  the  published  rate. 

Mr.  HiTCHiNS.  That  was  not  my  answer.  I  said  that  I  had  no  doubt 
on  export  traffic  we  had  participated  in  a  rate  less  than  the  rate  pub- 
lished on  domestic  traffic. 

Mr.  Day.  What  rate  did  they  accept? 

Mr.  HiTCHiNS.  I  do  not  know. 

Mr.  Day.  What  was  the  through  rate? 

Mr.  Hi'iCHi^s.  I  do  not  know. 

Mr.  Day.  Who  had  authority  to  make  the  quotations  for  the  Chicago 
Great  Western? 

Mr.  HiTCHiNS.  I  do  not  know.     I  did  uot. 

Mr.  Day.  Have  you  no  information  who  represented  the  Chicago 
Great  Western  in  the  making  of  the  concession  on  export  traffic? 

Mr.  HiTCHiNS.  I  know  of  no  concession. 

Mr.  Day.  You  said  you  had  no  doubt  it  was  true. 

Mr.  HiTCHiNS.  I  say  there  is  no  export  tariff.  The  rate  is  made  from 
week  to  week  as  necessity  arises. 

Mr.  Day.  Have  you  carried  any  export  traffic  within  a  week? 

Mr.  HiTCHiNS.  I  think  we  have. 

Mr.  Day.  At  what  rate? 

Mr.  HITCHINS.  I  do  not  know. 

Mr.  Day.  You  do  not  know  the  rate  made  through  to  any  point? 


APPENDIX   Q.  235 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  Nor  the  inland  portion  of  the  rate  to  New  York? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  You  said  you  had  no  doubt  the  Great  Western  had  par- 
ticipated in  a  lower  rate  than  their  published  tariff  on  domestic.  I 
understand  you  to  say  that? 

Mr,  HITCHINS.  Yes,  sir. 

Mr.  Day.  On  what  do  you  base  the  statement  that  there  is  no  tariff 
on  export  traffic? 

Mr.  HiTCHiNS.  It  would  be  impossible  to  have  one. 

Mr.  Day.  Have  you  examined  the  tariff  sheets  to  see  if  there  is  any 
rate  named? 

Mr.  HiTCHiNS.  Not  to  my  knowledge  there  is  not. 

Mr.  Day.  On  what  do  you  base  your  statement  that  you  had  no  doubt 
the  Chicago  Great  Western  had  carried  export  traffic  at  a  rate  lower 
than  the  published  rate  on  domestic? 

Mr.  HiTCHiNS.  I  do  not  think  it  would  be  possible  to  move  it  at  the 
tariff'  on  domestic.  It  is  a  matter  of  common  gossip.  The  rates  have 
been  published  from  week  to  week  what  the  stuff  was  moving  at.  I 
have  every  reason  to  believe  all  railroads  are  carrying  it  at  less  than 
the  published  rate  on  domestic. 

Mr.  Day.  What  are  your  reasons? 

Mr.  HiTCHiNS.  It  is  a  matter  of  common  gossip.  I  do  not  think  it 
would  be  possible  to  have  one  fixed  tariff  on  export. 

Mr.  Day.  Who  quotes  the  rate  on  export  traffic? 

Mr.  HiTCHiNS.  It  may  be  quoted  by  an  Eastern  line  man,  a  fast-freight 
line,  by  some  link  road,  the  three  I's,  the  representative  in  St.  Paul,  or 
a  steamship  man — I  do  not  know.  " 

Mr.  Day.  How  many  men  in  your  employ  subject  to  your  supervision? 

Mr.  HiTCHiNS.  Well,  I  could  not  tell  you  definitely.  I  have  about, 
I  should  judge,  between  thirty  and  forty. 

Mr.  Day.  How  many  men  in  your  office  that  quote  rates,  to  whom 
application  may  be  made  and  who  quote  rates? 

Mr.  HiTCHiNS.  Four  or  five. 

Mr.  Day.  Name  them  and  the  positions  they  hold. 

Mr.  HiTCHiNS.  W.  E.  Hogan,  freight  solicitor;  E.  M.  Jordan,  freight 
solicitor;  M.  J.  Pringle,  freight  solicitor;  H.  G.  Davis,  rate  clerk  That 
is  about  all. 

Mr.  Day.  Do  you  have  a  chief  clerk,  a  man  you  call  chief  clerk  ? 

Mr.  HiTCHiNs.  Yes,  sir. 

Mr.  Day.  Who  is  he? 

Mr.  HiTCHiNS.  C.  H.  Towney. 

Mr.  Day.  You  have  named  all  the  men  subject  to  your  supervision 
that  have  authority  to  quote  rates  ? 

Mr.  HiTCHiNs.  Those  men  have  no  authority  other  than  any  man  in 
my  employ  would  that  knew  how  to  go  to  the  tariff  and  get  the  rates. 

Mr.  Day.  What  is  the  function  of  the  freight  solicitors? 

Mr.  HiTCHiNS.  They  patrol  the  streets  looking  for  business. 

Mr.  Day.  Seeking  traffic? 

Mr.  HiTCHiNS.  Yes,  sir. 

Mr.  Day.  Have  you  ever  solicited  freight? 

Mr.  HiTCHiNS.  Very  little. 

Mr.  Day.  Have  you  ever  been  present  with  them  when  soliciting? 

Mr.  HiTCHiNS.  Very  rarely.  Perhaps  I  have  gone  around  with  them 
occasionally. 

Mr.  Day.  How  recently  ? 


236  APPENDIX    G. 

Mr.  HiTCHiNS.  I  could  not  say.  I  do  not  think  I  have  been  out  with 
one  of  them  for  six  months  or  a  year. 

Mr.  Day.  What  does  the  freight  solicitor  do  when  he  wants  to  secure 
traffic? 

Mr.  HiTCHiNS.  He  may  drop  in  and  see  a  man  and  ask  if  there  is 
anything  going  my  way.  The  man  will  say,  "Can  you  take  Marshall- 
town?"  "He  will  say,  "Yes,  sir."  "Can  you  give  me  good  service?" 
"Yes."  "I  want  the  car  tomorrow."  "Well,  I  will  see  that  you  get  it 
to-morrow."    That  is  one  method. 

Mr.  Day.  What  else  does  probably  occur?  Does  he  quote  a  rate  to 
him  ? 

Mr.  HiTCHiNS.  He  may.  He  may  say,  "  I  do  not  know  what  the  rate 
is.     1  will  go  back  to  the  office  and  call  you  up." 

Mr.  Day.  Are  there  instances  where  the  shipper  has  said,  "I  can  do 
better  by  another  line  than  your  line?" 

Mr.  HiTcniNS.  They  very  rarely  do  that.  It  is  a  rare  thing  for  a 
shipper  to  do  that. 

Mr.  Day.  When  it  does  occur — do  instances  of  that  kind  occur? 

Mr.  HiTCHiNS.  Sometimes.  Sometimes  their  tariffs  are  out  of  line. 
Sometimes  another  line  has  a  published  tariff  less  than  ours.  We  have 
lost  business  that  way. 

Mr.  Day.  Sometimes  it  is  said  the  rate  is  not  out  of  line  and  the  rate 
is  lower  than  other  rates  prevailing.  When  that  occurs,  when  he  says 
your  rate  is  too  high,  has  your  man  authority  to  quote  a  lower  rate? 

Mr.  H1TCHIN8.  No,  sir. 

Mr.  Day.  What  does  he  do  in  that  instance? 

Mr.  HiTCHiNS.  He  makes  a  report. 

Mr.  Day.  To  whom^ 

Mr.  HiTCHiNS.  To  me,  and  I  send  it  to  my  immediate  superior  in  the 
freight  department. 

Mr.  Day.  Who  is  he? 

Mr.  HiTCHiNS.  C.  R.  Berry,  assistant  general  freight  agent. 

Mr.  Day.  Then,  are  there  instances  where  Mr.  Berry  authorizes  you 
to  meet  the  rate  by  another  route? 

Mr.  HiTCHiNS.  No,  sir:  nobody  has  ever  authorized  me  to  cut  a  rate. 

Mr.  Day.  And  you  never  have  cut  a  rate? 

Mr.  HiTCHiNS.  How  far  back  are  you  going? 

Mr.  Day.  A  year. 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  What  do  you  mean  by  " cutting  a  rate?" 

Mr.  Hi  rcHiNS.  1  mean  accepting  less  than  our  published  tariff. 

Mr.  Day.  That  is  what  I  understood.  I  wanted  to  see  if  I  under- 
stood you  right.  You  want  the  Commission  to  understand  that  you 
have  not  authorized  or  consented  to  the  cutting  of  a  rate  on  packing- 
house products  or  dressed  beef  within  a  year? 

Mr.  HiTCHiNS.  That  is  exactly  what  I  said. 

Mr.  Day.  And  neither  directly  nor  indirectly  have  you  countenanced 
anything  of  the  kind  or  been  privy  to  anything  of  the  kind? 

Mr.  HiTCHiNS.  That  is  right. 

Mr.  Day.  Has  any  refund  on  rates  paid  been  presented  to  you 
because  of  any  shipment  that  has  passed  over  your  line  the  last  year 
on  any  claim  that  has  come  to  you  for  approval  or  examination  for 
your  O.K.? 

Mr.  HiTCHiNS.  You  mean  accepting  less  than  the  tariff  rate? 

Mr.  Day.  Tes,  sir. 

Mr.  HiTCHiNS.  Not  to  my  knowledge. 


APPENDIX    G.  237 

•Mr.  Day.  Wlietlier  it  was  domestic  or  export? 

Mr.  HiTOHiNS.  As  I  say,  I  do  not  kuow  of  any  tariff  on  export. 

Mr.  Day.  I  ask  whether  any  such  claim  of  that  kind  has  been  pre- 
sented to  you  on  traffic  destined  domestic  or  exijort  where  the  refund 
involved  the  carrying  of  that  traflic  at  less  than  the  tariff  rate — the  rates 
you  publish*? 

Mr.  HiTCHiNS.  There  is  uo  export  tariff. 

Mr.  Day.  Admitting  that  is  true,  has  any  claim  been  presented  to 
you  for  a  refund  on  the  amount  paid  ou  that  export  traffic  *? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  You  have  seen  no  such  claim? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  And  have  not  approved  of  any? 

Mr.  HITCHINS.  No,  sir. 

Mr.  Day.  Neither  directly  nor  indirectly? 

Mr.  HiTcniNS.  No,  sir. 

Mr.  Day.  What  has  been  the  practice  of  your  office,  say  at  any  time 
during  the  past  six  months,  regarding  the  settlement  of  freight  charges 
on  packing  house  products  in  which  your  road  participates  in  the  trans 
portation"? 

Mr.  HiTCHiNS.  I  do  not  understand  exactly  what  you  want. 

Mr.  Day.  How  often  do  you  make  settlements  with  shippers  of  pack 
in g- house  products'? 

Mr.  HiTCHiNS.  I  am  under  the  impression  that  they  settle  once  a 
week.     I  am  not  positive. 

IMr.  Day.  Has  that  been  the  general  practice? 

Mr.  HiTCHiNS.  I  think  so.  Settlements  are  made  with  the  general 
office. 

Mr.  Day.  It  is  not  paid  into  your  office? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  Do  the  accounts  come  to  your  office  at  all? 

Mr.  HiTCHiNS.  Not  necessarily. 

Mr,  Day.  Well,  have  they  come  within  the  past  six  mouths?  I  am 
speaking  now  of  the  regular  weekly  accounts. 

Mr.  HiTCHiNS.  No;  they  would  not  come  to  me  at  all. 

Mr.  Day.  They  would  not  come  to  your  office  at  all?  Your  office 
has  nothing  to  do  with  it?  Your  clerks  do  not  examine  them  and 
verify  the  accuracy  ? 

Mr.  HiTCHiNS.  You  are  speaking  of  the  regular  weekly  settlements 
on  the  packing  house  products? 

Mr.  Day.  Yes,  sir;  or  the  monthly  accounts, 

Mr.  HiTCHiNS.  They  would  not  come  to  me. 

Mr.-DAY.  What  accounts  come  to  you? 

Mr,  HiTCHiNS.  All  kinds  of  accounts  come  to  me. 

Mr.  Day.  What  statements  come  to  your  office  regardiug  packing- 
house products — what  have  come  to  your  office  the  past  six  months  iu 
regard  to  the  transportation  of  packing-house  products? 

Mr.  HiTCHiNS.  I  do  not  know. 

Mr.  Day.  Any  ? 

Mr.  HiTCHiNS.  I  suppose  there  have  been  statements  and  papers  come 
to  my  office  about  everything  connected  with  the  business  at  Kansas 
City. 

Mr.  Day.  I  am  speaking  of  packing-house  products,  one  single  article 
of  traffic,  or  the  articles  that  come  under  the  general  denomination  ot 
packing-house  i)roducts.  What  are  the  duties  of  your  office  or  of  you 
in  regard  to  those  ? 


288  APPENDIX   G. 

Mr.  HiTCHiNS.  I  have  no  particular  duties  in  regard  to  packing-honse 
products. 

Mr.  Day.  Have  your  clerks  anything  to  do  in  regard  to  packing-house 
products? 

Mr.  HiTCHiNS.  The  same  as  in  regard  to  anything  else. 

Mr.  Day.  What  is  that? 

Mr.  HiTCHiNS.  We  get  the  bills  of  lading;  we  make  a  waybill  for  it. 

Mr.  Day.  Who  brings  the  bills  of  lading  to  you? 

Mr.  HiTCHiNS.  The  Armour  Packing  Company  make  their  own.  We 
send  to  them  for  it.     All  the  others  send  their  bills  to  us. 

Mr.  Day.  What  do  you  do  with  those? 

Mr,  HiTCHiNS.  We  sign  an  original  and  duplicate  and  return  to 
them.     One  duplicate  we  retain. 

Mr.  Day.  Three  copies  of  the  bill  of  lading  are  made  and  you  sign 
two  that  go  to  them? 

Mr.  HITCHINS.  Yes,  sir;  and  we  retain  one  as  our  billing  instruc- 
tions; then  it  gets  to  the  billing  desk.  The  waybill  clerk  waybills  it 
according  to  the  bill  of  lading.  The  bill  of  lading  is  sent  out  to  the 
yard,  or  else  it  may  be  slipped  on  a  waybill  and  the  waybill  mailed  to 
the  final  destination  on  our  line. 

Mr.  Day.  Are  these  bills  of  lading  executed  there  ever  returned  to 
your  office  again  ? 

Mr.  HiTCHiNS.  The  ones  we  give  Armour,  they  would  be  returned 
in  case  of  a  claim  for  damage  or  overcharge,  or  anything  of  that  kind. 
Ordinarily  they  are  not  returned.  I  think  they  are  usually  surrendered 
on  export  stuff  for  a  through  bill,  or  otherwise  used  as  a  negotiable 
instrument. 

Mr.  Day.  Surrendered  to  whom  on  export  stuff? 

Mr.  HiTCHiNS.  The  line  that  issues  the  export  bill  of  lading. 

Mr.  Day.  He  takes  up  your  bill  of  lading  and  issues  a  through  bill 
of  lading? 

Mr.  HiTCHiNS.  Yes,  sir;  that  is  the  custom. 

Mr.  Day.  In  export  stuff  on  the  through  bill  it  is  the  line  agent 
that  quotes  the  through  rate? 

Mr.  HiTCHiNS.  I  do  not  know. 

Mr.  Day.  Who  does? 

Mr.  HiTCHiNS.  I  do  not  know. 

Mr.  Day.  You  quote  no  rate? 

Mr.  HiTCHiNS.  The  through  rate  may  be  quoted  by  the  lineman,  the 
steamship  man,  or  it  maybe  quoted  by  anybody  interested  in  the  traffic. 

Mr.  Day.  But  the  Chicago  Great  Western  makes  no  through  rate 
across  the  water  ? 

Mr.  HiTCHiNS.  I  do  not  know  whether  they  do  or  not;  I  do  not. 

Mr.  Day.  Have  you  any  reason  to  believe  that  it  has  been  done  by 
the  Chicago  Great  Western  in  the  past  year? 

Mr.  HiTCHiNS.  I  do  not  believe  it  has. 

Mr.  Day.  Do  you  get  ocean  quotations? 

Mr.  HITCHINS.  IsTo,  sir. 

Mr.  Day.  Or  any  quotations? 

Mr.  HiTCHiNS.  We  get  them,  but  we  do  not  pay  attention  to  them. 

Mr.  Day.  ISTow,  instances  where  the  Armour  Company,  or  any  com- 
pany, send  over  the  bill  of  lading  on  traffic  that  goes  out  over  your 
route,  who  makes  the  collection  for  that  traffic  which  is  prepaid? 

Mr.  HiTCHiNS.  I  do  not  understand  that. 

Mr.  Day.  I  will  ask  the  stenographer  to  repeat  it. 


APPEl^DTX    G.  239 

The  stenographer  repeated  the  qnestiou  as  follows: 

Mr.  Day,  Now,  instances  where  the  Armonr  Company,  or  any  company,  send  over 
the  bill  of  lading  on  traffic  that  goes  out  over  your  route,  who  makes  the  collection 
for  that  traffic  which  is  prepaid? 

Mr.  HiTCHiNS.  What  do  you  mean  by  "that  traffic?" 

Mr.  Day.  For  instance,  cases  where  Armour  and  other  packers  send 
over  bills  of  lading  to  you  in  duplicate  or  triplicate? 

Mr.  HiTCHTNS.  The  local  office. 

Mr.  Day.  The  local  agent? 

Mr.  HiTCHiNS.  Yes,  sir. 

Mr.  Day.  What  is  his  name? 

Mr.  HiT(!HiNS.  The  man  that  has  charge  of  the  local  office^  his  title 
is  assistant  agent;  his  name  is  C.  J.  Blodgett. 

Mr,  Day.  He  is  assistant  to  you? 

Mr.  HiTCHiNS.  Yes,  sir. 

Mr.  Day.  He  makes  the  actual  collection  of  cashT 

Mr.  HiTCHiNS.  No ;  he  sends  his  collectors  over. 

Mr.  Day.  Who  are  his  collectors? 

Mr.  HiTCHiNS.  I  will  get  the  names  after  a  while. 

Mr.  Day.  Are  they  the  men  you  spoke  of  a  while  ago  as  your 
subordinates? 

Mr.  HiTCHiNS.  Oh,  no;  you  asked  who  might  quote  a  rate. 

Mr.  Day.  This  man  is  your  subordinate? 

Mr.  HITCHINS.  Mr.  Blodgett? 

Mr.  Day.  Yes. 

Mr.  HiTCHiNS.  Yes,  sir. 

Mr.  Day.  When  he  makes  collections  of  money,  or  his  office  collects 
money,  is  that  deposited  in  your  name? 

Mr.  HiTCHiNS.  Yes,  sir. 

Mr.  Day.  You  do  not  know  who  it  is  in  his  office  that  makes  col- 
lections on  prepaid  packing-house  products? 

Mr.  HiTCHiNS.  I  told  you  I  knew  him,  but  his  name  has  slipped  my 
memory. 

Mr.  Day.  Do  you  exercise-  supervision  over  those  accounts  to  see 
whether  the  cash  is  collected  that  ought  to  be  collected? 

Mr.  HiTCHiNS.  Not  personal  supervision. 

Mr.  Day.  You  do  not  examine  the  accounts  to  see  from  whom  the 
cash  is  coming  and  whether  the  amount  is  paid  in  that  ought  to  be 
paid  in? 

Mr.  HiTCHiNS.  It  would  be  an  impossibility  to  attend  to  all  those 
details. 

Mr.  Day.  How  do  you  satisfy  yourself  that  those  things  are  straight? 

Mr.  Hitchins.  My  subordinates  are  all  bonded. 

Mr.  Day.  You  make  no  examinatiou? 

Mr.  Hitchins.  No;  the  railway  company  have  an  auditor  that  makes 
an  examination. 

Mr.  Day.  Commencing  on  the  28th  of  January  and  running  through 
to  the  17th  of  February  there  was  transported  over  the  Chicago  Great 
Western,  in  conjunction  with  the  Traders'  Despatch,  15  cars  of  traffic, 
packing-house  products,  which  went  through  to  New  York  on  an 
agreement  of  17  cents  a  hundred  off  the  through  rate.  Were  you  cog 
nizant  of  that? 

Mr.  Hitchins.  No,  sir;  I  do  not  believe  it,  either, 

Mr.  Day.  You  do  not  believe  it? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  You  mean  to  say  that  on  all  traffic  transported  by  the 


240  APPENDIX    G. 

Great  Western  road  during  the  month  of  February— packing-house 
products — destined  for  New  York  the  full  published  tariff  rate  was 
paid? 

Mr.  HiTCHiNS.  1  have  no  knowledge  of  anything  less,  and  I  believe 
firmly  that  that  was  the  case. 

Mr.  Day.  That  there  were  no  contracts  or  agreements  made? 

Mr.  HiTCHiNS.  Not  to  my  knowledge. 

Mr.  Day.  Did  you  ever  hear  of  an  agreement  made  by  the  Chicago 
Great  Western  road,  a  contract  with  the  Armour  Packing  House  Com- 
pany, or  the  Armours,  made  in  the  year  1900,  called  the  "  protection 
agreement?" 

Mr.  HiTCHiNS.  I  never  heard  of  that. 

Mr.  Kellogg.  And,  Mr.  Day,  nobody  else  ever  heard  of  it,  because 
it  was  never  made  with  anybody. 

Mr.  Day.  Or  with  the  agents  of  the  Packing  House  Company.  You 
never  heard  of  anything  of  that  kind? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  You  never  heard  a  phrase  of  that  kind? 

Mr.  HiTcniNS.  No,  sir. 

Mr.  Day.  What  fast  freight  lines  operate  over  the  Chicago  Great 
Western  ? 

Mr.  HiTCHiNS.  None. 

Mr.  Day.  I  do  not  mean  that  the  Chicago  Great  W  estern  participates 
in  the  furnishing  of  the  cars  or  are  parties  to  the  fast-freight  line,  but 
what  fast-freight  lines  operate  most  over  the  Chi(;ago  Great  Western 
up  to  Chicago? 

Mr.  HITCHINS.  There  are  no  fast-freight  lines  operating  over  the 
Chicago  Great  Western  road. 

Mr.  Day.  What  do  you  mean  by  "operating?" 

Mr.  HiTCiiiNS.  What  do  you  mean? 

Mr.  Day.  Well,  what  do  you  mean?    I  am  asking  you. 

Mr.  HiTCHiNS.  The  Chicago  Great  Western  are  not  interested  in 
the  operation  of  a  fast  freight  line,  have  no  arrangement  with  any  fast- 
freight  line  to  run  their  cars  and  participate  with  us,  and  we  do  not 
participate  in  any  of  their  expenses  in  any  shape  or  form. 

Mr.  Day.  Take  the  Traders'  Despatch ;  any  claim  made  by  a  shipper 
for  a  refund  for  damage— do  you  contribute  anything  whatever? 

Mr.  HiTCHiNS.  Only  so  far  as  our  liability  as  the  Chicago  Great 
Western.     We  operate  entirely  independently. 

Mr.  Day.  I  understand  that.  What  sort  of  participation  have  you 
had  the  past  six  mouths  in  the  way  of  making  up  a  claim,  refunding  a 
claim,  or  paying  damage?     Have  you  had  anything  of  that  kind? 

Mr.  HiTCHiNS.  I  would  not  handle  a  damage  claim.  If  there  was  a 
damage  claim  it  might  come  to  me  here  at  Kansas  City  to  get  informa- 
tion, but  we  have  no  diiierent  arrangement  with  the  Traders'  Despatch 
from  any  other  line. 

Mr.  Day.  I  understand  that.  I  do  not  mean  to  intimate  that  you 
had.  If  a  claim  should  be  presented  through  the  Traders'  Despatch  to 
the  Chicago  Great  Western  to  participate  in  a  rebate,  would  that  come 
to  you? 

Mr.  HiTCHiNS.  No,  sir. 

Mr.  Day.  Or  come  to  your  office? 

Mr.  HiTCHiNS.  No,  sir;  I  do  not  suppose  it  would.  I  have  never 
seen  any. 

Mr.  Day.  I  am  asking  now  if  the  agent,  any  agent  of  the  Traders' 
Despatch,  should  seek  to  collect  the  assessment  of  refund  whereby  a 


APPENDIX   G.  241 

rebate  was  secured  on  the  transportation  of  packing-house  products, 
would  those  claims  come  to  you  for  your  share  of  the  rebate? 

Mr.  HiTCHiNS.  No, 

Mr.  Day.  Suppose  the  rate  was  shrunk  15  cents  a  hundred  from  here 
to  New  York,  or  7i  or  8  cents  from  here  to  the  Mississippi  River,  and 
supposeyour  road  did  participate  in  that,  would  the  claim  for  that  be 
presented  to  you  at  all? 

Mr.  HiTCHiNS.  I  do  no  care  to  suppose  that. 

Mr,  Day.  Well,  has  it  been  done  in  any  instance  within  a  year? 

Mr.  HiTcniNS.  No,  sir. 

Mr.  Day.  You  know  of  no  claim  of  that  nature? 

Mr.  Hit  CHINS.  No, 

Mr.  Day.  :>!r.  Hitchins,  during  the  month  of  October,  1000,  did  you 
or  any  of  your  force  with  your  knowledge  and  consent — knowledge 
after  or  before  the  fact — propose  to  carry  packing-house  products  at 
less  til  an  tlie  rate  named  in  your  published  tariff? 

Mr.  IIiTCHiNS,  No,  sir. 

Mr.  Day.  Not  in  the  month  or  October  or  November? 

Mr.  Hitchins.  No,  sir. 

Mr,  Day,  Nor  December,  1900? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  On  traffic  exported,  have  you  or  your  subordinates  accepted 
less  for  the  haul  to  the  seaboard  than  the  rate  jiublished  on  domestic 
traffic? 

Mr.  Hitchins.  I  have  no  doubt  they  have. 

Mr.  Day.  Do  you  know  whether  you  have  or  not? 

Mr.  Hitchins.  Well,  I  do  not  remember  any  specific  case  of  any 
divisions,  but  I  know  it  is  customary  for  us  to  accept  a  division  of  the 
export  rate  which  is  less  than  the  published  tariff  rate  on  domestics. 

Mr.  Day.  Can  you  state  to  the  Commission  any  rate  you  have  accepted 
less  than  the  published  rate  on  domestic  for  the  same  port? 

Mr.  Hi  1  CHINS.  No;  I  could  not. 

Mr.  Day.  Well,  approximately. 

Mr.  Hitchins.  Well,  1  would  not  know  what  the  divisions  were 
finally.  It  is  a  matter  for  adjustment  between  the  lines.  We  do  not 
quote  any  rates  to  Liverpool  or  Loudon.  Our  otlice  does  not  quote  any 
export  rates  at  all. 

Mr.  Day.  You  say  it  is  a  matter  of  adjustment  between  the  lines — 
how  of  adjustment? 

Mr.  Hitchins.  Well,  it  may  be  adjusted  by  claim. 

Mr.  Day.  How  is  the  claim  presented? 

Mr.  Hitchins,  There  are  a  number  of  ways.  It  may  be  presented 
by  the  line  that  clears  the  stuff"  at  the  seaboard.  The  provisions  may 
be  billed  from  here  to  seaboard  and  a  bill  of  lading  given  by  the  fast- 
freight  line  naming  the  rate.  The  line  at  the  seaboard  Avould  deliver 
to  the  steamship  company  on  the  basis  of  the  inland  division  or  propor- 
tion of  the  export  rate,  and  if  it  is,  as  a  matter  of  convenience,  billed  at 
the  rate  on  domestic,  the  foreign -freight  agent  at  New  York,  Boston,  or 
Baltimore  will  make  a  claim  on  his  company  which  will  be  cleared 
through  the  different  lines.     That  is  one  method. 

Mr.  Day.  Well,  what  is  another? 

Mr.  Hitchins.  Another  method  would  be  for  the  fast- freight  line  man 
here  to  collect  the  money  and  send  it  to  us.  The  packer  may  remit 
direct  to  him. 

Mr.  Day.  Has  any  claim  come  under  your  cognizance,  either  by  the 

741a— 05 16 


242  APPENDIX    G. 

delivering  carrier  at  the  port  of  export  or  any  steamship  agency,  for 
participation  by  your  road  in  any  share  of  the  oceau  charges? 

Mr  HiTCHiNS.  Not  to  my  knowledge.  I  do  not  remember  receiving 
anything  of  that  kind. 

Mr.  Day.  In  domestic  bills  of  lading  that  are  sent  to  your  office  for 
signature  you  say  they  come  in  triplicate.     Is  the  rate  named  therein  ? 

Mr.  HiTCHiNS.  Usually. 

Mr.  Day.  The  through  rate  to  destination  is  mentioned  in  the  bill  of 
lading? 

Mr.  HiTcniNS.  On  export  traffic? 

Mr.  Day.  No  ;  on  the  domestic. 

Mr.  HiTCniNS.  Yes,  sir. 

Mr.  Day.  How  is  it  in  regard  to  bills  of  lading  for  export? 

Mr.  HiTCHiNS.  I  do  not  know,  because  I  do  not  issue  any  export 
bills  of  lading.    They  are  surrendered  here 

Mr.  Day.  I  mean  the  bills  of  lading  you  issue  which  are  afterwards 
taken  up  bj^  the  fast-freight  line  agents  on  export  traffic. 

Mr.  HiTCHiNS.  I  do  not  know  whether  they  are  rated  or  not. 

Mr.  Day.  Yon  say  you  do  not  know  whether  the  rate  is  inserted? 

Mr.  HiTCHiNS.  Yes,  sir.  I  will  explain  our  system:  Our  principal 
packing-house  business  is  with  the  Armour  Company,  They  are  very 
close  to  us.  Our  fast  meat  train  leaves  at  6  o'clock  and  they  usually 
have  the  billing  ready  at  5.30.  We  send  a  man  over  and  he  signs  the 
bills  over  there.     If  they  are  rated,  they  rate  them  themselves. 

Mr.  Day.  Who  is  the  man  who  goes  over  to  sign  them? 

Mr.  HiTCHiNS.  My  son  has  been  doing  it.  A  young  man,  17  or  18 
years  old. 

Mr.  Day.  Whose  name  does  he  sign — yours  or  his  own? 

Mr.  HiTCHiNS.  Mine. 

Mr.  Day.  Is  it  not  usual  on  bills  of  lading — is  it  not  a  usual  thing  to 
have  inserted  phraseology  substantially  like  this :  "  Rate  prepaid,  ocean 
charges  to  follow." 

Mr.  HiTcniNS.  That  may  be. 

Mr.  Day.  What  is  your  son's  full  name? 

Mr.  HITCHINS.  Clayton  S.  Hitchins. 

Mr.  Day.  Do  you  have  anything  to  do  with  the  mileage  that  is  paid 
by  your  road  on  refrigerator  cars? 

Mr.  Hitchins.  No,  sir. 

Mr.  Day.  Or  private  cars — do  you  have  anything  to  do  with  the 
accounts? 

Mr.  Hitchins.  The  mileage  accounts? 

Mr.  Day.  Yes,  sir. 

Mr.  Hitchins.  No;  not  a  thing. 

Mr.  Day.  Who  does  that? 

Mr.  Hitchins.  It  is  handled  by  the  car  accountant  in  St.  Paul. 

Mr.  Day.  What  is  his  name? 

Mr.  Hitchins,  Snow. 

Mr.  Day,  You  have  nothing  to  do  with  it? 

Mr.  Hitchins,  Not  a  thing. 

Mr.  Day.  Take  these  refrigerator  cars.  Do  they  come  back  with  the 
traffic  or  do  they  simply  carry  traffic  one  way? 

Mr.  Hitchins,  That  depends  on  the  convenience  of  the  carrier. 

Mr.  Day.  How  does  it  prevail  on  your  line  ? 

Mr.  Hitchins.  If  we  are  short  of  cars  we  load  them  west;  if  we  are 
moving  empty  cars  this  way  anyhow,  we  move  them  empty.  It  is  a 
matter  of  convenience. 


APPENDIX    G.  243 

Mr.  Day.  Wbicli  practice  prevails? 

Mr.  HiTOHiNS.  It  depends  on  circumstances.  Sometimes  we  are  load- 
ing merchandise  in  them  and  at  other  times  we  are  not. 

Mr.  Day.  What  is  your  estimate  as  to  the  time  they  are  used? 

Mr.  HiTCHiNS.  I  could  not  give  you  an  estimate  at  a  time  of  this 
kind.  When  there  is  a  big  east-bound  movement  it  is  more  convenient 
to  load  box  cars,  and  the  refrigerators  are  allowed  to  come  empty. 
When  we  do  not  have  empty  cars  in  this  part  of  the  country  we  load 
merchandise  in  refrigerators. 

Mr.  Day.  That  is  all. 

Commissioner  Prouty.  I  want  to  ask  a  question  about  the  export 
business.  Doyou  know  when  a  carload  of  packing-house  products  leaves 
Kansas  City  whether  it  is  for  export  or  domestic  consumption? 

Mr.  HiTCHiNS.  Yes,  sir. 

Commissioner  Prouty.  You  always  know  that? 

Mr.  Hitchins.  On  export  it  is  consigned  in  cars  of  a  foreign  freight 
agent  and  mentions  to  sail  on  such  and  such  a  steamer,  such  a  date. 

Commissioner  Prouty.  That  is  so  even  though  the  billing  is  at  the 
domestic  rate.  I  understand  you  to  say  that  export  traffic  is  sometimes 
billed  on  the  domestic  rate  and  the  difference  subsequently  adjusted  by 
claim  ? 

Mr.  Hitchins.  Yes,  sir. 

Commissioner  Prouty.  My  inquiry  is,  can  you  always  determine 
when  the  freight  leaves  Kansas  City  whether  it  is  for  export  or  domestic 
consumption? 

Mr.  Hitchins.  Yes,  sir;  the  bill  of  lading  reads  "for  export,"  and 
gives  the  routing. 

Commissioner  Prouty.  That  bill  of  lading  would  be  made  out  by 

Mr.  Hitchins.  The  shipper  with  us. 

Commissioner  Prouty.  And  would  give  the  steamship  by  which  it 
was  to  go? 

Mr.  Hitchins.  Yes,  sir. 

Commissioner  Prouty.  Through  whose  office  is  settlement  made 
with  the  Great  Western  for  its  share  in  the  rate  on  an  export  shipment? 

Mr.  Hitchins.  Well,  it  would  ordinarily  be  through  the  auditor's 
office. 

Commissioner  Prouty.  Would  it  come  to  your  office  at  all? 

Mr.  Hitchins.  It  might. 

Commissioner  Prouty.  You  say  it  might? 

Mr.  Hitchins.  There  are  so  many  different  methods  by  which  it 
could  be  settled.  Now,  the  method  I  described  to  Judge  Day,  the  ship, 
ment  to  be  billed  from  here  at  the  published  domestic  rate 

Commissioner  Prouty.  Suppose  it  is  billed  at  the  published  domes 
tic  rate;  in  that  case  do  they  pay  you  at  this  office  the  published 
domestic  rate? 

Mr.  Hitchins.  Well,  if  it  is  billed  collect,  it  is  paid  at  the  port.  If 
they  pay  us,  they  pay  not  the  published  rate  on  domestic,  but  the  rate 
they  have  on  the  export  rate. 

Commissioner  Prouty.  That  is.  Armour  &  Co.  have  a  rate  for  export 
business,  and  they  pay  you  that  rate  even  though  it  is  billed  at  the 
domestic  rate  ? 

Mr.  Hitchins.  Yes,  sir. 

Commissioner  Prouty.  There  have  been  instances  in  which  they 
have  paid  you  in  that  way? 

Mr.  Hitchins.  Yes,  sir. 


244  APPENDIX   G. 

Commissioner  Phouty,  I  wish  you  would  look  uji  some  iustances  of 
that  kind,  some  one  instance  of  that  kind,  and  tell  us  the  amount  paid 
you  on  some  one  car  or  shipment  just  as  an  illustration  of  that  methi^d 
of  doing  business. 

Mr.  HiTCHiNS.  Yes,  sir. 

Commissioner  Trouty.  You  say  there  is  another  method  of  doing 
business  and  that  is  by  way  of  claim  which  your  freight  agent  would 
make  in  New  York  ? 

Mr.  HiTCHiNS.  The  foreign  freight  agent  of  the  line  that  brought  the 
stuff  into  New  York. 

Commissioner  Prouty.  Does  that  claim  pass  through  your  office? 

Mr.  HiTCHiNS.  ]So,  sir;  it  would  not. 

Commissioner  Prouty.  You  would  not  know  anything  about  that? 

Mr.  HiTCHiNS.  No,  sir. 

Commissioner  Prouty.  Can  you  tell  in  a  rough  way  what  the  rela- 
tive amount  of  export  and  domestic  business  is  that  you  carried  out  of 
Kansas  City  for  the  packers  for  the  last  year — how  much  has  been 
export  and  how  much  domestic? 

Mr.  HiTOHiNS.  I  have  not  that  at  my  fingers'  ends.  I  could  ascer- 
tain. 

Commissioner  Prouty.  1  wivsh  you  would  give  me  a  general  notion. 
Has  two  thirds  been  ex])ort  or  three-fourths? 

Mr.  HiTCHiNS.  I  would  guess  the  other  way. 

Commissioner  Prouty.  Two-thirds  domestic? 

Mr.  HiTCHiNS.  Yes,  sir;  but  I  may  be  wrong  about  that. 

Commissioner  Prouty.  You  have  in  your  office  the  material  by  which 
you  could  make  a  statement  showing  how  much  was  domestic  and  how 
much  export  during  the  last  year? 

Mr.  HiTCiiiNS.  Y^es,  sir. 

Commissioner  Prouty.  I  wish  you  would  make  a  statement  of  that 
sort  from  March  1, 11)00,  to  March  1, 1901,  showing  how  much  you  han- 
dled and  how  much  was  for  export  and  how  much  domestic. 

Mr.  HiTCHiNS.  Yes,  sir. 

Commissioner  Prouty.  Y^ou  say  you  do  not  understand  that  there 
is  any  export  published  rate.  That  means,  I  suppose,  that  on  exi)ort 
traffic  you  take  any  rate  you  can  get,  or  some  rate  that  some  person 
authorized  has  a  mind  to  give? 

Mr.  HiTCHiNS.  The  final  divisions  of  an  export  rate  I  have  nothing 
to  do  with  determining  how  much  they  are,  but  my  understanding  is 
that  there  is  not  and  can  not  be  a  published  rate  on  export  traffic. 

Commissioner  Prouty.  It  is  your  business,  you  say,  to  get  your 
share  of  the  traffic  at  Kansas  City? 

Mr.  Hitchins.  I  beg  pardon.     I  say  to  try  to  get  it. 

Commissioner  Prouty.  I  do  not  suppose  you  do  get  it.  No  road 
does  that.  When  you  think  you  are  not  getting  quite  your  share  of 
the  traffic,  what  do  you  do  about  it? 

Mr.  Hitchins.  I  report  to  my  superior  officer. 

Commissioner  Prouty.  That  is  a  problem  you  do  not  undertake  to 
deal  with? 

Mr.  Hitchins.  Yes,  sir. 

Commissioner  Prouty.  And  presently  the  traffic  comes  your  way 
again  ? 

Mr.  Hitchins.  If  it  does  not  I  keep  hammering  at  them. 

Commissioner  Prouty.  I  want  to  ask  you  how  many  lines  carry 
packing-house  products  out  of  Kansas  City  east? 

Mr.  Hitchins.  Initial  lines  out  of  Kansas  City? 


APPET*7DIX    G.  245 

Commissioner  Prouty.  Out  of  Kansas  City. 

Mr.  HiTCHiNS.  I  think  there  are  thirteen. 

Commissioner  Prouty.  Thirteen  lines  operating  in  Kansas  City  to 
carry  traffic  from  Kansas  City  to  eastern  destinations? 

Mr.  HiTCHiNS.  Yes,  sir. 

Commissioner  Prouty.  What  do  you  mean  by  lines? 

Mr.  HiTCHiNS.  I  mean  railroads. 

Commissioner  Prouty.  Are  there  more  than  13  railroads  entering 
Kansas  City? 

Mr.  HiTCHiNS.  Yes,  sir. 

Commissioner  Prouty.  How  many  railroads  in  Kansas  City  compete 
for  export  business? 

Mr.  HiTCHiNS.  Thirteen,  as  I  understand. 

Commissioner  Prouty.  Are  there  not  some  roads  that  carry  export 
business  through  southern  ports? 

Mr.  HiTCHiNS.  In  the  13  I  include  those. 

Commissioner  Prouty.  How  many  compete  for  business  to  Kew  York? 

Mr.  HiTCHiNS.  Well,  I  do  not  know  without  counting  up.  I  should 
say  about  ten. 

Commissioner  Clements.  How  many  important  packing  houses  in 
Kansas  City  for  whose  business  these  roads  compete? 

Mr.  Hitchins.  There  is  the  Armour  Packing  House,  Swift,  Fowler, 
Cudahy,  Schwarzschild  &  Sulzberger;  the  Dold  Packing  Company  were 
in  business,  but  they  burnt  out  and  have  not  yet  rebuilt. 

Commissioner  Clements.  Does  your  road  get  business  from  all  these 
companies  in  important  quantities? 

Mr.  Hitchins.  We  may  get  business  from  all,  but  we  get  the  bulk  of 
our  business  from  the  Armour  Packing  Company. 

Commissioner  Clements.  Does  Armour  &  Co.  ship  mostly  over  your 
road,  or  divide  among  all  the  roads? 

Mr.  Hitchins.  It  divides  among  all  of  them. 

Commissioner  Clements.  When  you  sign  a  bill  of  lading,  or  some- 
body does  on  your  behalf,  presented  by  the  Armour  Company,  what 
steps  do  you  take  to  ascertain  whether  it  is  a  correct  statement  of  the 
weight  and  quantity? 

Mr.  Hitchins.  The  Armour  Comj)any  are  members  of  the  Western 
Eailway  Weighing  Association,  an  association  formed  by  all  the  rail- 
roads; they  are  members  of  that  association,  who  have  men  examine 
their  books  at  regular  intervals  to  see  that  they  have  given  the  right 
weights. 

Commissioner  Clements.  Who  compose  the  association? 

Mr.  Hitchins.  All  the  railroads  west  of  Chicago,  I  think,  are  mem- 
bers of  the  Western  Eailway  Weighing  Association. 

Commissioner  Clements,  In  case  of  foreign  shipments  you  bill,  as  I 
understand,  to  the  seabord  only? 

Mr.  Hitchins.  Yes,  sir.  .  Well,  tke  bill  is  issued  in  Kansas  City 
through  to  the  final  destination. 

Commissioner  Clements.  Is  it  issued  here? 

Mr.  Hitchins.  It  is  issued  here  to  the  final  port — final  destination. 

Commissioner  Clements.  Well,  in  respect  to  shipments  of  this  kind, 
does  anything  come  to  your  knowledge  subsequently,  any  papers  or 
inquiries  of  any  kind  relating  to  claims  for  overcharge  or  damage  or 
things  of  that  kind? 

Mr.  Hitchins.  Well,  it  would  depend.  If  a  shipment  was  damaged 
I  would  be  asked  for  my  record,  how  it  was  loaded,  under  what  seals  it 
went  forward,  what  train,  what  conductor 


246  APPENDIX    G. 

Commissioner  Clements.  And  what  quantity? 

Mr.  HiTCHiNS.  Yes,  sir;  and  if  we  bad  inspected  the  car,  if  we 
knew  that  quantity  was  loaded,  whether  we  a(3cepted  the  packer's  check. 

Commissioner  Clements.  In  case  it  was  an  overcharge,  would  the 
same  inquiries  come  to  you? 

Mr.  HiTCHiNS.  It  would  depend  altogether  on  the  nature  of  the 
overcharge  claimed.  If  they  claimed  an  overcharge  in  weight  or  an 
overcharge  that  they  had  given  an  erroneous  description  of  the  article 
or  we  had  charged  them  on  one  article  and  it  was  really  another,  that 
claim  would  go  to  the  Western  Railway  Weighing  Association  and 
they  would  have  their  inspector  go  down  and  see  what  the  goods  were 
and  what  the  shipment  was  and  make  his  recommendations. 

Commissioner  Clements.  You  have  no  information  directly  or  indi- 
rectly of  any  method  of  adjusting  claims  under  these  various  classes 
for  overcharges,  damages,  etc.,  by  which  a  part  of  the  rate  is  to  be  paid 
back  and  is  paid  back? 

Mr.  HITCHINS.  No,  sir. 

Commissioner  Clements.  That  is  all. 

Mr.  Day.  When  you  issue  bills  of  lading  or  execute  bills  of  lading 
sent  to  you  by  the  shipper,  what  does  that  bill  of  lading  contain  that 
you  have  your  name  subscribed  to? 

Mr.  Hitchins.  It  is  our  printed  form  of  contract. 

Mr.  Day.  What  is  written  in  ? 

Commissioner  Prouty.  Have  him  bring  one,  Mr.  Day,  and  let  us 
see  it.     Let  him  bring  one  of  each  kind,  a  domestic  and  a  foreign  one. 

Mr.  Day.  Very  well,  Mr.  Hitchins,  bring  that  with  the  memorandum 
of  names. 

Mr.  Hitchins.  Yes,  sir. 

Commissioner  Clements.  Will  you  bring  those  in  the  afternoon? 

Mr.  Hitchins.  Yes,  sir. 

Commissioner  Clements.  That  seems  to  be  all. 

The  witness  was  excused. 

D.  F.  HuRD,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  is  your  occupation,  Mr.  Hurd? 

Mr.  HuRD.  I  represent  the  Lake  Shore  and  Michigan  Southern  Rail- 
road, the  Red  Line,  and  White  Line,  and  the  West  Shore  Line. 

Mr.  Day.  So  you  have  a  double  capacity  here.  You  represent  the 
Lake  Shore  and  Michigan  Southern  Railroad  and  the  three  lines? 

Mr.  HuRD.  The  three  fast  freight  lines  operating  over  their  rails. 

Mr.  Day.  What  roads  do  those  three  lines  operate  over? 

Mr.  HuRD.  The  Red  Line  is  primarily  the  Lake  Shore  and  l^ew  York 
Central  to  New  York;  to  Boston  and  New  England  territory  the  Lake 
Shore,  the  New  York  Central,  and  the  Boston  and  Albany;  to  Phila- 
delphia it  operates  over  the  Lake  Shore,  the  New  York  Central,  and 
the  Philadelphia  and  Reading.  The  West  Shore  is  similar  except  that 
the  West  Shore  Railroad  is  substituted  for  the  New  York  Central. 

Mr.  Day.  Do  the  lines  you  represent  operate  over  any  particular 
roads  west  of  Chicago? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  You  send  your  cars  loaded  over  whatever  route  from  here 
may  suit  the  convenience  of  the  shii)per  or  your  convenience? 

Mr.  HuRD.  We  have  no  line. 

Mr.  Day.  What  are  your  functions  here  in  relation  to  those  three  fast 
freight  lines  and  the  railroads  you  have  mentioned  ?  What  is  the  scope 
of  your  duties? 

Mr.  HuRD,  Looking  after  their  interest  in  their  varied  nature. 


APPENDIX    Q.  247 

Mr.  Day.  What  work  do  you  perform  for  the  Lake  Shore? 

Mr.  HuRD.  I  endeavor  to  secure  traffic  for  them  and  look  after  such 
matters  as  may  come  up  in  connection  with  it. 

Mr.  Day.  In  respect  to  packing-house  products,  do  you  quote  rates? 

Mr.  HuRD.  When  we  are  called  upon. 

Mr.  Day.  Where  do  you  quote  rates  to? 

Mr,  HuRD.  To  territory  to  which  the  lines  interested  operate. 

Mr,  Day.  Do  you  have  published  tariffs  in  your  office? 

Mr,  HuRD.  Yes,  sir;  we  have  the  file  of  tariffs, 

Mr,  Day.  Are  you  supplied  with  tariffs  as  they  are  changed  from  time 
to  time  by  the  road  you  represent? 

Mr.  HuRD.  We  are  supposed  to  be. 

Mr.  Day.  And  the  agencies  of  which  they  are  members? 

Mr.  HuRD.  We  are  supposed  to  have  a  complete  file. 

Mr.  Day.  What  is  the  present  rate  on  packing-house  products  to 
New  York  City? 

Mr.  HuRD.  From  where? 

Mr.  Day.  i^>ora  here  to  New  York  City. 

Mr.  HuRD.  My  recollection  is  that  the  rate  is  53J  cents. 

Mr.  Day,  How  is  that  made  up? 

Mr.  HuRD.  It  can  be  made  up  in  two  ways,  one  based  on  the  Missis- 
sippi River  of  18^  cents  and  35  cents  east,  aud  the  other  based  on  Chi- 
cago 23^  cents  plus  30  cents  east, 

Mr.  Day.  During  the  month  of  February  did  you  quote  any  rate  on 
packing-house  products  to  New  York  less  than  that  rate? 

Mr.  HuRD.  Not  that  I  know  of. 

Mr.  Day.  Did  you  during  the  month  of  March? 

Mr.  HuRD.  You  speak  of  this  month  ? 

Mr.  Day.  Yes,  sir. 

Mr.  HuRD.  Not  that  I  know  of. 

Mr.  Day.  Do  your  records  show  what  rates  you  have  contracted  to 
take  traffic  at? 

Mr.  HuRD.  We  have  practically  had  none. 

Mr.  Day.  You  mean  the  three  lines  of  road  you  represent  have  not 
carried  any  from  here  during  the  month  of  March — packing-house 
products  ? 

Mr.  HuRD.  Practically  nothing, 

Mr.  Day.  What  do  you  mean  by  "practically  nothing?"  None  at  all? 

Mr.  HuRD.  We  might  have  had  one  or  two  cars. 

Mr.  Day.  How  about  the  month  of  February? 

Mr.  HuRD.  You  are  referring  to  packing-house  products  other  than 
dressed  beef? 

Mr.  Day.  Packing-house  products,  dressed  beef — either  or  both? 

Mr.  HuRD.  I  could  not  say  how  much  we  have  had.    I  do  not  know. 

Mr.  Day.  Do  your  records  show? 

Mr.  HuRD.  Yes,  sir. 

Mr.  Day.  What  sort  of  record  do  you  keep? 

Mr.  HuRD.  Of  such  shipments  as  we  are  advised  move  our  way. 

Mr.  Day.  How  many  employees  have  you  in  your  office? 

Mr.  Hurd.  I  have  a  contract  agent  and  a  stenographer. 

Mr.  Day.  Have  you  quoted  any  traffic  for  export  at  a  lower  rate 
than  the  published  rate  on  domestic  traffic  ? 

Mr.  Hurd.  No,  sir. 

Mr.  Day.  Have  you  contracted  for  any  during  the  months  of  January, 
February,  or  March? 

Mr.  Hurd.  No,  sir. 


248  APPENDIX    G. 

Mr.  Day.  Did  you  during  the  mouth  of  December? 

Mr.  HURD.  No,  sir. 

Mr.  Day.  Or  November? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Or  October? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Have  you  contracted  to  carry  any  traffic,  either  domestic 
or  export,  to  the  port  of  New  York  or  Boston  at  a  lower  rate  than  the 
published  rate? 

Mr.  HuRD.  I  have  not, 

Mr.  Day.  Has  anybody  in  your  office  under  your  sux>ervisiou  done 
that? 

Mr.  HiiRD.  Not  to  my  knowledge. 

Mr.  Day.  Would  you  know  it  if  it  had  been  done? 

Mr.  HuRD.  I  believe  I  would. 

Mr.  Day.  You  wish  the  Commission  to  understand,  do  ;^ou,  that  all 
of  the  traffic  that  has  been  contracted  for,  packing- house  products  or 
dressed  beef,  during  this  year  has  been  contracted  for  at  the  ijublished 
rate,  that  is,  53i  cents? 

Mr.  HuRD.  In  so  far  as  I  know  anything  about  or  have  had  anything 
to  do  with. 

Commissioner  Prouty.  How  do  you. make  export  rates?  Do  the 
packers  inquire  for  an  export  rate? 

Mr.  HuRD.  They  may  very  seldom  of  me. 

Commissioner  Prouty.  If  they  did,  how  would  you  make  it? 

Mr.  HuRD.  We  would  add  the  ocean  rate  obtainable  from  time  to 
time  to  the  published  tariff  rate  to  seaboard. 

Commissioner  Prouty.  That  is  all. 

Mr.  Day.  Mr.  Hurd,  from  whom  do  you  get  your  tariffs  which  yon 
quote  to  shippers? 

Mr.  Hurd.  It  depends  what  basis  we  use,  or  rather,  what  initial 
routing.     The  Mississippi  Elver  tarlHs  are  ])ublished  by  Western  roads. 

Mr.  Day.  I  mean  from  the  Mississippi  River  east? 

Mr.  Hurd.  They  would  come  to  us,  and  probably  do,  from  the  offices 
of  the  western  roads. 

Mr.  Day.  Do  you  get  any  of  them  from  the  Central  Freight 
Association  ? 

Mr.  Hurd.  Any  tariffs? 

Mr.  Day.  Yes,  sir. 

Mr.  Hurd.  No,  sir. 

Mr.  Day.  Do  you  get  any  tariff  sheets  from  the  office  of  which  Mr. 
J.  F.  Tucker  is  chairman  ? 

Mr.  Hurd.  I  do  not  recall  any. 

Mr.  Day.  Have  you  received  a  document  from  his  office  or  from  the 
Lake  Shore  and  JMichigan  Southern  agencies,  any  of  them,  or  from  any 
other  of  the  lines  east  of  the  Mississippi  Kiver,  or  any  association,  nam- 
ing an  export  rate  on  packing-house  products  of  29  cents  from  the 
Mississippi  Elver  ? 

Mr.  Hurd.  Of  how  much? 

Mr.  Day.  29  cents. 

Mr.  Hurd.  I  have  no  knowledge  of  it. 

Mr.  Day.  Have  you  any  information  that  there  is  such  a  rate? 

Mr.  Hurd.  No  information. 

Mr.  Day.  Or  a  rate  of  25  cents  from  Chicago  east  on  export  traffic? 

Mr.  HuED.  No,  sir. 


APPENDIX   G.  249 

Mr.  Bay.  You  bave  had  no  information  of  any  such  rate  being 
quoted  either  formally,  officially,  or  informally? 

Mr.  HuRD.  I  have  no  knowledge  of  it. 

Mr.  Day.  Yon  have  not  heard  of  it"? 

Mr.  HuRD.  Heard  whether  there  was  or  nott 

Mr.  Day.  Yes,  sir. 

Mr.  HuRD.  I  have  heard  it  remarked  as  a  matter  of  conversation. 

Mr.  Day.  Heard  what  remarked? 

Mr.  HuRD.  That  there  was  such  a  tariff. 

Mr.  Day.  Who  did  you  hear  that  it  came  from — what  source? 

Mr.  HuRD.  That  the  information  came  from  or  the  document? 

Mr.  Day.  The  tariff — the  information  you  have.  Assign  the  origin 
of  that  tariff. 

Mr.  HuRD.  I  do  not  know;  I  do  not  recollect. 

Mr.  Day.  When  did  yon  understand  that  that  was  issued? 

Mr.  HuRD.  My  recollection  is  possibly  six  weeks  ago;  possibly  less. 

Mr.  Day.  Was  it  not  about  or  shortly  after  the  1st  of  January? 

Mr.  HuRD.  It  would  not  ajipear  to  me  so. 

Mr.  Day.  From  whom  do  you  get  the  authority  to  make  rates? 

Mr.  HuRD.  I  have  no  authority. 

Mr.  Day.  To  name  rates — to  quote  rates? 

Mr.  HuRD.  Other  than  our  published  tariff  rates. 

Mr.  Day.  Where  do  you  get  that  from? 

Mr.  HuRD.  I  consider  that  the  tariff  furnished  me  is  authority  to 
quote  the  rate  therein  contained.  It  may  come  from  one  source  or 
another. 

Mr.  Day.  Have  you,  within  the  past  six  months,  say,  had  any 
authority  from  any  source  to  quote  a  lower  rate  than  the  published 
tariff  rate  on  either  domestic  or  export  traflflc? 

Mr.  HuRD.  Not  that  I  know  of. 

Mr.  Day.  Do  you  mean  that  no  such  authority  has  been  given  you 
or  that  you  do  not  remember  whether  it  has  or  not? 

Mr.  HuRD.  I  do  not  know  of  such  authority  having  been  given  me. 

Mr.  Day.  Have  you  participated  at  all  in  the  refund  of  any  charges 
that  had  been  collected,  prepaid,  on  packing-house  products  in  thei^ast 
six  months? 

Mr.  HuRD.  Not  to  my  knowledge.  I  do  not  know  that  there  have 
been. 

Mr.  Day,  Have  you  at  any  time? 

Mr.  HuRD.  How  far  back  do  you  refer? 

Mr.  Day.  Well,  say  a  year  and  a  half. 

Mr.  HuRD,  No,  sir. 

Commissioner  Prouty.  Ask  him  if  he  ever  did,  Mr.  Day, 

Mr.  Day.  Well,  answer  that  question. 

Mr.  HuRD.  I  do  not  know  that  I  'lave. 

Mr.  Day.  Do  you  not  remember? 

Mr.  HuRD.  I  do  not  know  that  I  have. 

Commissioner  Prouty.  Do  you  know  you  have  not? 

Mr.  HuRD.  My  recollection  is  strong  that  way. 

Mr.  Day.  Has  any  claim  passed  through  your  hands,  whether  coming 
from  either  of  the  officers  of  the  fast  freight  lines  that  you  represent 
here  or  through  the  shipi)er,  for  any  refund  on  charges  that  had  been 
prepaid  on  traffic  destined  for  domestic  consumj)tion  at  the  Atlantic 
seaboard  or  for  export? 

Mr.  HuRD.  I  do  not  know  of  any  such  conditions. 

Mr.  Day.  I  ask  you  whether  any  claim  has  been  presented  to  you? 


250  APPENDIX   G. 

Mr.  HURD.  ISo,  sir. 

Mr.  Day.  Or  passed  through  your  hands  lor  your  approval! 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Or  for  your  examination? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Not  within  the  last  six  months? 

Mr.  HURD.  No.  sir. 

Mr.  Day.  No  claim  presented  to  you  on  behalf  of  Armour  &  Co.? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Swift  &  Co.? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Schwarzschild  &  Sulzberger? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Or  Fowler,  Limited? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Or  the  Cudahys? 

Mr.  HuED.  No,  sir. 

Mr.  Day.  Has  any  claim  been  presented  to  you  for  a  contribution  or 
for  you  to  collect  from  others  to  the  payment  of  ocean  charges  on  traf- 
fic that  has  beeu  carried  east  by  the  lines  you  represent  or  either  of 
them? 

Mr.  HuRD.  That  question  once  more. 

Mr.  Day.  I  will  ask  the  stenogra])her  to  repeat  it. 

The  stenographer  repeated  the  question  as  follows: 

Mr.  Day.  Has  any  claim  been  presented  to  you  for  a  contribution  or  for  you  to 
collect  from  others  to  the  payment  of  ocean  charges  on  traflic  that  has  been  carried 
east  by  the  lines  you  represent  or  either  of  them? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  The  traffic  that  went  out  over  either  of  the  lines  you  repre- 
sent here  in  the  month  of  January  or  February— you  say  some  did  go- 
how  is  that  traflic  billed? 

Mr.  HuRD.  Let  me  refer  to  dressed  beef  in  that  particular.  That  is 
the  only  traflic  I  know  of,  and  I  know  nothing  about  that  as  to  its 
condition. 

Mr.  Day.  You  know  nothing  about  what? 

Mr.  HuRD.  The  movement  of  the  dressed-beef  business  other  than 
the  records  that  we  have  had  dressed-beef  business. 

Mr.  Day.  I  am  asking  as  to  the  bills  of  lading.  You  issue  a  bill  of 
lading  on  the  traflic  that  comes  by  the  White  Line,  or  either  of  the 
lines  you  represent? 

Mr.  Httrd.  We  may  be  called  on  to  do  so. 

Mr.  Day.  What  is  expressed  in  the  bill  of  lading?  What  do  you 
put  into  the  bill  of  lading?     Do  you  sign  it? 

Mr.  HuRD.  I  do  not  know  that  we  have  issued  any  bills  of  lading  for 
that  traflic. 

Mr.  Day.  For  any  traffic? 

Mr.  HuRD.  Not  for  that  traffic  referred  to. 

Mr.  Day.  Well,  any  dressed  beef  traffic  within  the  last  six  months, 
or  packing-house  products  within  the  last  six  months. 

Mr.  HuRD.  We  may  have  issued  bills  of  lading. 

Mr.  Day.  Tell  the  Commission  what  is  the  course  of  your  business, 
how  you  conduct  it,  whether  you  take  up  the  bills  of  lading  issued  by 
the  initial  line  and  what  sort  of  bill  of  lading  you  substitute  for  it,  and 
what  appears  in  that  bill  of  lading? 

Mr.  HuRD.  Should  we  be  called  on  to  issue  a  bill  of  lading  the  west- 


APPENDIX   G.  251 

em  road's  receipt  would  be  presented,  for  which  we  would  exchange  the 
bill  of  lading. 

Commissioner  Prouty.  Would  you  do  it  here  or  somewhere  else? 

Mr.  HuRD.  At  Kansas  City. 

Mr.  Day.  What  do  you  exj^ress  in  that  bill  of  lading!  What  do  you 
write  into  it?    The  number  of  the  car? 

Mr.  HuRD.  If  it  is  requested ;  not  always. 

Mr.  Day.  The  consignor — is  he  named? 

Mr.  HuRD.  Yes,  sir. 

Mr.  Day.  The  consignee? 

Mr.  HuRD.  Yes,  sir. 

Mr.  Day.  The  character  of  the  trafiacf 

Mr.  HuRD.  Yes,  sir. 

Mr.  Day.  The  weight? 

Mr.  HuRD.  Yes,  sir. 

Mr.  Day.  Who  makes  out  these  bills  of  lading? 

Mr.  HuRD.  They  are  made  out  in  my  office  by  the  clerk. 

Mr.  Day.  They  are  not  written  up  by  the  shij)pers,  by  the  packers? 

Mr.  HuRD.  We  have  hiid  none  that  way. 

Mr.  Day.  Is  the  rate  at  which  the  traffic  is  carried  named  in  the  bill 
of  lading t 

Mr.  HuRD.  It  may  be. 

Mr.  Day.  What  is  the  usual  practice? 

Mr.  HuRD.  1  hardly  feel  competent  to  speak  on  the  usual  practice 
because  we  have  not  had  enough  of  it  to  sigiiify. 

Mr.  Day.  I  am  speaking  of  either  dressed  beef  or  packing-house 
l)roducts. 

Mr.  HuRD.  Dressed  beef  we  issue  no  bills  of  lading  on  whatever. 

Mr.  Day.  What  substitute  is  used  for  a  bill  of  lading?  What  is  your 
procedure  ?  What  do  you  do  ?  How  do  you  keep  your  account  ?  What 
do  you  issue  to  the  shipper? 

Mr.  HuRD.  We  issue  nothing  to  the  shipper.  He  calls  on  us  for 
nothing.  In  fact,  we  have  no  record  of  it  other  than  thej  come  to  us 
with  copies  of  billing. 

Mr.  Day.  The  copies  of  billing  on  dressed  beef? 

Mr.  HuRD.  Yes,  sir;  copies  of  the  waybills. 

Mr.  Day.  Well,  now,  in  the  bills  of  lading  you  have  issued  in  the 
past  six  months,  in  what  instances  has  the  rate  been  inserted  in  the  bill 
of  lading? 

Mr.  HuRD.  I  do  not  know  that  it  has  or  has  not. 

Mr.  Day.  In  wliat  instances  do  you,  as  a  matter  of  course,  insert  it? 

Mr.  HuRD.  What  would  we  insert? 

Mr.  Day.  In  what  instances  is  the  rate  at  which  the  traffic  is  carried 
or  at  which  it  is  contracted  for  inserted  in  the  bill  of  lading? 

Mr.  HuRD.  It  strikes  me  at  the  request  of  the  shipper  whether  or  not. 

Mr.  Day.  Otherwise  you  do  not  insert  it.  Who  writes  up  the  bills 
of  lading  in  your  office? 

Mr.  HuRD.  Mr.  Ledlie. 

Mr.  Day.  He  signs  your  name? 

Mr.  HuRD.  My  name. 

Mr.  Day.  How  long  have  you  been  agent  for  these  lines  here? 

Mr.  HuRD.  Two  years. 

Mr.  Day.  When  the  traffic  goes  out  over  one  of  the  lines  you  repre- 
sent, and  the  charges  are  jwepaid,  who  are  they  paid  to? 

Mr.  HuRD.  It  may  be  in  one  instance  one  party  or  another.  I  do 
not  know. 


252  APPENDIX   Q. 

Mr.  Day.  Are  they  paid  to  yonr  office  at  all  in  any  instance? 

Mr.  HuRD.  I  do  not  recall  any  instance. 

Mr.  Day.  Do  you  wish  the  Commission  to  understand  that  you  say 
it  has  not  been  paid  to  your  office? 

Mr.  HuRD.  It  may  have  been. 

Mr.  Day.  Has  that  occurred  this  month? 

Mr.  HuRD.  1  do  not  know  of  anything  this  month. 

Mr.  Day.  Any  instance  during  the  month  of  February? 

Mr.  HuRD.  I  do  not  know  of  anything  during  February. 

Mr.  Day.  You  mean  to  say  that  none  was  prepaid  during  February? 

Mr.  HuED.  I  do  not  know  of  any. 

Mr.  Day.  Your  books  show,  do  they? 

Mr.  HuRD.  I  do  not  know  whether  they  would  or  not. 

Mr.  Day.  What  books  do  you  keep?  What  sort  of  books  do  you 
keep  in  which  packing-house  products  or  dressed  beef  transported  by 
either  of  the  lines  you  represent  are  mentioned? 

Mr.  HuRD.  We  have  no  books,  no  bookkeeping  method. 

Mr.  Day.  What  sort  of  record  do  you  keei)? 

Mr.  HuRD.  I  do  not  know  how  to  answer  that  question  as  to  a 
record. 

Mr.  Day.  What  sort  of  documentary  evidence  do  you  preserve  from 
day  to  day  or  week  to  week  respecting  packing-house  products  or 
dressed  beef  that  has  passed  across  the  Mississippi  River  by  either  of 
the  lines  you  represent? 

Mr.  HuRD.  We  enter  it  in  what  we  call  a  tonnage  book. 

Mr.  Day.  What  does  that  shoM'^? 

Mr.  HuRD.  It  shows  the  date,  the  car  number,  the  consignee,  the 
destination,  and  weight. 

Mr.  Day.  The  rate? 

Mr.  IIURD.  It  may  show  the  rate. 

Mr.  Day.  Does  it  usually? 

Mr.  HuRD.  I  do  not  know  whether  it  does  or  not. 

Mr.  Day.  What  rate  does  it  show? 

Mr.  HuRD.  The  rate  from  which  the  record  is  made. 

Mr.  Day.  Does  it  show  the  rate  at  which  the  traffic  is  carried? 

Mr.  HuRD.  So  far  as  I  know. 

Mr.  Day.  Y'ou  say  you  have  two  clerks  in  your  office,  two  assistants? 

Mr.  HuRD.  I  have  a  stenographer  and  clerk. 

Mr.  Day.  WHiat  is  your  stenographer's  name? 

Mr.  HuRD.  A  lady,  Miss  Hardacre. 

Mr.  Day.  What  is  her  first  name? 

Mr.  HuRD.  Ruth. 

Mr.  Day.  What  is  the  man  assistant's  name? 

Mr.  HuRD.  H.  L.  Ledlie. 

Mr.  Day.  Have  you  at  any  time  within  the  past  six  months  made 
any  assessment  or  presented  any  claim  to  any  of  the  roads  that  par- 
ticipated in  the  hauling  of  the  traffic  that  went  by  your  line — packing- 
house products  or  dressed  beef? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Have  any  moneys  passed  through  your  hands — and  when 
I  speak  of  moneys  I  include  checks,  drafts,  or  any  evidence  of  the  right 
to  collect  money — passed  through  your  hands  in  the  past  six  mouths 
which  represented  a  refund  or  rebate  on  traffic  that  had  been  taken  by 
your  lines  to  points  east  of  the  Mississippi  River? 

Mr.  HuRD.  Has  any? 

Mr.  Day.  Yes. 


APPENDIX    G.  253 

Mr.  nuRD.  There  may  have. 

Mr.  Day.  When? 

Mr.  HuRD.  I  do  not  know  of  any  particular  period. 

Mr.  Day.  How  about  the  month  of  February — any  in  Fl'briiary? 

Mr.  HuRD.  You  ask  me  whether  we  have  handled  any  moneys  during 
the  month  for  the  transportation  of  business? 

Mr.  Day.  Which  represented  a  rebate  or  refund  on  what  has  been 
paid? 

Mr.  HuRD.  I  would  like  to  amend  my  answer  to  say,  there  has  not. 

Mr.  Day.  Do  you  quote  ocean  rates?  Do  you  quote  rates  from  Kan- 
sas City  on  packing-house  products  to  Liverpool  or  any  continental 
ports? 

Mr.  HuRD.  If  we  should  be  called  on  we  would. 

Mr.  Day.  Have  you  done  so  within  a  month  ? 

Mr.  HuRD.  I  may  have. 

Mr.  Day.  When? 

Mr.  HuRD.  I  do  not  know  when. 

Mr.  Day.  This  week? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Last  week? 

Mr.  HuRD.  I  do  not  recall  last  week. 

Mr.  Day.  Quote  them,  I  say — name  tlie  rate,  or  Mr.  Ledlie  represent- 
ing you? 

Mr.  HuRD.  Rates  may  have  been  quoted.  We  are  frequently  called 
up  over  the  telephone  to  name  rates. 

Mr.  Day.  I  ask  if  that  has  been  done  within  a  week? 

Mr.  HuRD.  I  could  not  say  whether  it  has  or  has  not. 

Mr.  Day.  How  about  last  week? 

Mr.  HuRD.  It  is  possible. 

Mr.  Day.  What  rate  to  Liverpool  were  you  quoting  last  week? 

Mr.  HuRD.  I  do  not  know  I  was  quoting  it. 

Mr.  Day.  Name  a  rate  you  did  quote  last  week  to  some  foreign  port. 

Mr.  HuRD.  I  do  not  know  that  I  quoted  a  rate  last  week  to  a  foreign 
port. 

Mr.  Day.  Or  this  week? 

Mr.  HuRD,  Or  this  week. 

Mr.  Day.  Or  Mr,  Ledlie  quoted  for  you? 

Mr.  HuRD.  I  do  not  know. 

Mr.  Day.  Name  some  rate  you  quoted  within  a  month  to  Liverpool 
or  a  continental  port. 

Mr.  HuRD.  I  do  not  recall  a  rate  quoted  to  Liverpool  or  a  continental 
port. 

Mr.  Day.  In  January,  then? 

Mr.  HuRD.  I  do  not  recall. 

Mr.  Day.  How  was  that  rate  made  up  when  you  did  quote  it? 

Mr.  HuRD,  I  do  not  remember. 

Mr.  Day.  When  you  quote  it,  how  do  you  make  up  the  rate  to  the 
continental  port  or  Liverpool  or  London  or  Gla-sgow? 

Mr.  HuRD.  I  think  I  answered  that  question. 

Mr.  Day.  Answer  it  again. 

Mr.  HuRD.  The  ocean  rate  obtainable  from  time  to  time  added  to  the 
inland. 

Mr.  Day.  Added  to  the  full  inland? 

Mr.  HuRD.  Yes,  sir. 

Mr.  Day.  In  every  instance  the  full  inland  was  exacted  that  you  did 
carry  it  at? 


254  APPENDIX   O. 

Mr.  HuRD.  I  do  not  know  that  we  have  always  computed  the  rates. 

Mr.  Day.  Did  you  have  anything  to  do  with  the  collecting  of  them? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  When  you  quote  a  rate  to  any  foreign  port,  how  are  the 
ocean  charges  cared  for,  i)aid,  or  by  whom? 

Mr.  HuRD.  They  may  be  prepaid  and  they  may  be  collected  at  the 
other  end. 

Mr.  Day.  When  prepaid,  who  pays  them  and  to  what  agency? 

Mr.  HuRD.  If  prepaid  they  would  be  paid  by  the  shipper. 

Mr.  Day.  Do  your  agencies  have  any  relation  to  agencies  in  New 
York  that  prepa3'  the  rate  to  you? 

Mr.  HuRD.  Forwarding  agents  in  New  York? 

Mr.  Day.  Yes,  sir. 

Mr.  HuRD.  No,  sir;  not  that  I  know  of. 

Mr.  Day.  Do  you  have  anything  to  do  with  quoting  an  ocean  rate, 
or  do  you  have  anything  to  do  with  the  payment  of  it? 

Mr.  HuRD.  Not  necessarily. 

Mr.  Day.  Do  you  at  all,  in  any  instance?     Have  you  paid  it? 

Mr.  HuRD.  I  do  not  know  of  any  instance. 

Mr.  Day.  You  said  that  in  the  bill  of  lading,  or  in  your  tonnage 
book,  the  weight  of  the  trafiQc  loaded  and  carried  by  your  lines,  or  the 
lines  you  rei)resent,  is  stated.  What  is  the  purpose  of  having  the 
weight  stated  in  the  tonnage  book? 

Mr.  HuRD.  It  is  a  matter  of  an  abstract  of  billing. 

Mr.  Day.  Simply  an  abstract  of  the  billing? 

Mr.  HuRD.  Yes,  sir. 

Mr.  Day.  Does  the  statement  of  weight  serve  any  purpose  other  than 
the  formal  abstract  of  the  billing?  Do  you  use  that  weight  later  on  for 
any  puri)ose? 

Mr.  HuRD.  I  know  of  no  purpose  it  would  be  used  for. 

Mr.  Day.  So  far  as  the  keeping  of  your  accounts  are  concerned  or 
any  further  dealing  with  the  traffic  is  concerned  you  might  as  well  not 
have  the  matter  set  down. 

Mr.  HuRD.  As  far  as  dealing  with  the  traffic? 

Mr.  Day.  Yes. 

Mr.  HuRD.  It  is  simply  an  office  convenience. 

Mr.  Day.  What  do  you  use  it  for? 

Mr.  HuRD.  Possibly  making  up  a  tonnage  statement;  possibly  in 
referring  to  it  sometimes. 

Mr.  Day.  For  what  purpose  might  you  refer  to  it? 

Mr.  HuRD.  We  might  be  called  upon  to  locate  a  delayed  shipment 
or  lost  shipment. 

Mr,  Day.  Or  if  referred  to  you  for  the  purpose  of  adjusting  an 
account? 

Mr.  HuRD.  If  we  were  sent  papers  in  a  damage  claim  or  an  over- 
charge claim  it  would  probably  be  referred  to. 

Mr.  Day.  How  would  the  overcharge  be,  for  a  greater  weight  than 
actually  carried? 

Mr.  HuRD.  It  might  be. 

Mr.  Day.  How  do  you  ascertain  the  weight  set  down  in  the  tonnage 
book?    Is  the  weight  actually  represented  in  the  car? 

Mr.  Hurd.  We  do  not  know  it  to  be  a  fact. 

Mr.  Day.  From  whom  do  you  get  the  weight? 

Mr,  Hurd.  The  weights  are  from  copies  of  waybills. 

Mr.  Day.  Who  does  the  weighing? 


APPENDIX    G.  255 

Mr.  HuRD.  The  weighing  done  at  Kansas  City  is  done,  I  believe,  by 
the  Western  Weighing  Association. 

Mr.  Day.  Do  they  weigh  all  cars  of  packinghouse  products  and 
dressed  beef? 

Mr.  HuRD.  I  do  not  know  that. 

Mr.  Day.  Do  they  generally  weigh  them  ? 

Mr.  HuED.  1  do  not  know  that. 

Mr.  Day.  Do  you  know  whether  they  have  an  agent  at  each  of  the 
l^acking  houses? 

Mr.  HuRD.  I  do  not  know  it  positively. 

Mr.  Day.  What  is  your  understanding? 

Mr.  HuRD.  I  never  have  had  the  question  presented. 

Mr.  Day.  When  traffic  goes  along  with  charges  to  follow,  does  your 
office  have  anything  to  do  with  the  collection  of  the  charges? 

Mr.  HuRD.  No,  sir. 

Mr.  Day.  Then  for  the  past  six  months  the  only  function  your  office 
has  served  is  the  quoting  of  rates  and  the  exchange  of  billing.  Is 
that  it? 

Mr.  HuRD.  Not  exactly. 

Mr.  Day.  Well,  what  is  it? 

Mr.  HuRD.  Soliciting  traffic. 

Mr.  Day.  What  else? 

Mr.  HuBD.  Looking  after  such  traffic  as  might  have  been  solicited 
and  secured. 

Mr.  Day.  What  else? 

Mr.  HuRD.  I  do  not  know  that  I  could  definitely  specify  anything 
else. 

Commissioner  Prouty.  You  say  you  are  frequently  called  on  to 
quote  an  export  rate? 

Mr.  Hurd.  Not  frequently,  no,  sir;  infrequently. 

Commissioner  Prouty.  Do  you  solicit  traffic  from  these  packers? 

Mr.  Hurd.  I  call  upon  them  occasionally. 

Commissioner  Prouty.  What  for? 

Mr.  Hurd.  For  the  purpose  of  enjoying  some  of  their  business. 

Commissioner  Prouty.  Do  you  have  any  talk  with  them  about  rates? 

Mr.  Hurd.  I  have  not  for  a  considerable  period. 

Commissioner  Prouty.  Why  not? 

Mr.  Hurd.  There  does  not  seem  to  have  been  any  object. 

Commissioner  Prouty.  You  have  been  here  about  two  years  now? 

Mr.  Hurd.  Yes,  sir. 

Commissioner  Prouty.  And  has  it  been  true  all  the  time  that  your 
lines  did  not  carry  any  of  this  packing-house  traffic? 

Mr.  Hurd.  Practically  none  of  it. 

Commissioner  Prouty.  They  never  carried  any? 

Mr.  Hurd.  I  do  not  say  that.    We  have  carried  some  of  it. 

Commissioner  Prouty.  When  was  that? 

Mr.  Hurd.  We  may  be  carrying  some  of  the  dressed  beef  business 
every  few  days,  some  every  week  possibly. 

Commissioner  Prouty.  I  am  talking  now  of  packing-house  products. 

Mr.  Hurd.  We  have  carried  some  of  it. 

Commissioner  Prouty.  Your  lines  are  the  West  Shore  and  New 
York  Central? 

Mr.  Hurd.  Our  lines  operate  over  those  two  railroads. 

Commissioner  Prouty.  You  reach  New  York  and  Boston  over  those 
lines? 

Mr.  HuED.  Yes,  sir. 


25(5  APPENDIX   Q. 

Commissioner  Prouty.  You  say  your  lines  operate  over  those  lines'? 
Wlio  pays  the  expense  of  your  line? 

Mr.  HuRD.  I  understand  the  exi)enses  of  the  lines  are  paid  by  the 
railroads  interested  forming  the  line. 

Commissioner  Prouty.  What  are  the  railroads  interested? 

Mr.  Hi'RD.  I  believe  I  answered  that  question  in  specifying  how  the 
different  lines  operated. 

Commissiouer  Prouty.  I  did  not  hear  it  and  perhaps  we  can  get  at 
it  quicker  by  having  you  rei>eat  than  by  referring  back  to  it. 

Mr.  Hurd.  The  Red  Line  operates  over  the  Lake  Shore  and  Michigan 
Southern  and  the  ISTew  York  Central  to  New  York;  the  White  Line 
over  the  Lake  Shore  and  Michigan  Southern,  the  New  York  Central, 
and  the  Boston  and  Albany  to  Boston;  and  to  Philadelphia  over  the 
Lake  Shore  and  Michigan  Southern,  the  New  York  Central,  and  the 
Philadelphia  and  Reading. 

Commissioner  Prouty.  Now,  take  that.  You  reach  Boston  and  New 
York  over  the  New  York  Central  and  the  Lake  Shore  and  Michigan 
Southern? 

Mr.  Hurd.  Yes,  sir. 

Commissioner  Prouty.  Do  I  understand  you  to  say  that  those  lines 
never  carried  any  of  this  ijacking-house  traffic — I  mean  the  line  you 
represent,  the  Red  Line,  never  carried  any  of  this  traffic? 

Mr.  Hurd.  I  never  said  that  we  never  carried  any.  I  said  a  frac- 
tional portion. 

Commissioner  Prouty.  Have  they  ever  carried  any  considerable 
amount? 

Mr.  Hurd,  Not  in  the  two  years  I  have  been  here. 

Commissioner  Prouty.  Have  you  ever  had  any  talk  with  the  packers 
about  that? 

Mr.  Hurd.  Yes,  sir. 

Commissioner  1*routy.  What  is  the  reason  they  do  not  send  their 
traffic  by  those  lines? 

Mr.  Hurd.  That  is  a  proposition  I  never  have  been  able  to  answer 
successfully  myself. 

Comissioner  Prouty.  You  say  that  recently  you  have  not  had  any 
talk  with  them  about  rates.     Did  you  originally? 

Mr.  Hurd.  A  rate  discussion  will  possibly  come  up  in  talking  with 
a  man.  He  may  want  a  rate  to  a  point.  We  would  quote  a  rate  if 
he  asked  for  it. 

Commissioner  Prouty.  Does  the  Red  Line  feel  satisfied  that  you  do 
not  carry  any  of  that  traffic? 

Mr.  Hurd.  You  do  not  mean  individually? 

Commissioner  Prouty.  I  mean  the  line  itself;  are  they  satisfied? 

Mr.  Hurd.  I  hardly  think  they  are. 

Commissioner  Prouty.  Do  you  correspond  with  them  about  this 
situation? 

Mr.  Hurd.  Occasionally. 

Commissioner  Prouty.  What  do  you  tell  them  the  reason  is  that  you 
do  not  carry  that  traffic — what  do  you  think  the  reason  is  that  you  do 
not  carry  it? 

Mr.  Hurd.  Well,  I  do  not  know  what  to  think. 

Commissioner  Prouty.  You  have  not  any  idea  about  itt 

Mr.  Hurd.  I  may  have  an  idea,  but  it  may  be  wrong. 

Commissioner  Prouty.  Do  you  understand  from  your  knowledge  of 
the  situation  here  that  rates  on  packing  house  products  are  maintaiuedt 

Mr.  HuED.  I  have  no  knowledge  to  the  contrary. 


APPENDIX   G.  257 

Commissioner  Prodt  Y.  I  am  not  talking  about  knowledge.  You  have 
an  idea  or  impression.  From  what  you  hear  and  see,  do  you  understand 
that  rates  are  maintained  from  Kansas  City  to  New  York? 

Mr.  HuRD.  I  hear  more  or  less  current  report  to  that  effect. 

Commissioner  Prouty.  To  the  effect  that  they  are  not  maintained 
or  that  they  are  maintained?  It  would  require  considerable  current 
report  to  convince  you  that  they  were  maintained. 

Mr.  HURD.  I  can  not  say  it  has  actually  convinced  me. 

Commissioner  Prouty.  Have  you  ever  been  told  by  these  packers 
that  if  you  make  as  good  a  rate  as  other  lines  you  could  carry  that 
traffic? 

Mr.  HuRD.  I  do  not  think  the  question  has  ever  been  up.  I  do  not 
think  I  have  been  told  that. 

Commissioner  Prouty.  That  is  all, 

Mr.  Day.  That  is  all. 

The  witness  was  excused. 

Mr.  Day  called  the  name  of  M.  M.  Vincent,  to  which  there  was  no 
response. 

Mr.  Day.  If  the  Commission  please,  this  witness,  Mr.  M.  M.  Vincent, 
was  duly  served  with  a  subpoena  and  the  return  is  made  by  the  United 
States  marshal.  He  executed  this  writ  by  reading  same  to  M.  M.  Vin- 
cent, March  13,  at  Kansas  City,  Mo.  Mr.  Marshal  [addressing  deputy 
marshal],  will  you  call  Mr.  M.  M.  Vincent  three  times  in  court? 

The  deputy  marshal  called  the  name  of  M.  M.  Vincent  three  times  in 
a  loud  voice  in  the  court  room,  to  which  there  was  no  response. 

W.  J.  MoKoNE,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  Mr.  McKone,  what  is  your  business— your  occupation? 

Mr.  McKoNE.  I  have  charge  of  the  Jacob  Dold  Packing  Company 
and  Refrigerator  Car  Line. 

Mr.  Day.  Is  that  a  corporation  or  partnership? 

Mr.  MoKojNE.  The  car  line  is  owned  and  operated  by  the  Jacob  Dold 
Packing  Company,  which  is  a  corporation. 

Mr.  Day.  What  business  relations  do  you  have  to  the  Jacob  Dold 
Packing  Company  other  than  looking  after  the  car  line? 

Mr.  McKoNE.  Well,  previous  to  a  year  and  a  half  ago  I  looked  after 
all  their  detail  business  in  the  way  of  shipments. 

Mr.  Day.  How  since  then? 

Mr.  McKoNB.  Since  then  I  have  their  business  in  general.  I  do  a 
little  of  everything  to  sustain  my  position. 

Mr.  Day.  How  many  cars  do  you  have  in  this  car  line  under  your 
charge? 

Mr.  MoKoNE.  I  think  we  have  about  220  or  230— under  230. 

Mr.  Day.  Are  they  all  refrigerator  cars? 

Mr.  McKoNE.  No,  sir. 

Mr.  Day.  What  are  they? 

Mr.  McKoNE.  We  have  refrigerator  cars,  tank  cars,  and  box  cars. 

Mr.  Day.  Other  than  refrigerator  cars? 

Mr.  McKoNE.  About  212  or  215. 

Mr.  Day.  What  mileage  do  you  receive  from  the  different  railroads 
over  which  your  cars  operate  on  your  refrigerator  cars? 

Mr.  McKoNE.  Well,  the  mileage  varies. 

Mr.  Day.  West  of  the  Mississippi  River  ? 

Mr.  MoKoNE.  West  of  the  Mississippi  River  to  the  Colorado  line  I 
think  we  get  1  cent  a  mile. 

Mr.  Day.  And  east? 

741  A— 05 17 


258  APPENDIX  a. 

Mr.  McKoNE.  East  of  the  Mississippi  River  all  lines  pay  three- fourths 
of  a  cent. 

Mr.  Day.  Do  you  get  the  same  mileage  on  your  tank  and  box  cars? 

Mr.  McKoNE.  No;  tank  cars  are  three-fourths  and  some  Eastern 
lines  only  pay  six-tenths. 

Mr.  Day.  What  do  you  get  on  box  cars? 

Mr.  MoKoNE.  Six-tenths. 

Mr.  Day.  Do  you  get  mileage  both  ways  on  your  tank  carsT 

Mr.  McKoNE.  Yes,  sir. 

Mr.  Day.  Whether  they  are  full  or  empty  ? 

Mr.  McKoNE.  Yes,  sir. 

Mr.  Day.  Are  tank  cars  used  for  return  trafl5c? 

Mr.  McKoNE.  Well,  I  do  not  know  any  case  where  any  were  used. 

Mr.  Day.  What  do  you  use  tank  cars  for — what  commodity? 

Mr.  McKoNE.  We  used  them  at  that  time  in  shipjjing  lard. 

Mr.  Day.  What  do  you  use  them  for  now? 

Mr.  McKoNE.  Oil. 

Mr.  Day.  Do  you  maintain  any  system  of  accounts  in  your  oflBce 
regarding  these  cars? 

Mr.  McKoNE.  Yes,  sir. 

Mr.  Day.  What  accounts  do  you  keep  respecting  the  cars  and  their 
use? 

Mr.  McKoNE.  We  have  a  mileage  record  with  all  parties  we  rent 
cars  to  or  loan  out.  They  give  us  a  report  every  morning  of  their  ship- 
ments. They  are  entered  up  on  this  record.  It  is  a  record  of  one  ot 
our  own  system.  Then,  we  get  junction  cards  from  every  junction  in 
the  United  States,  telling  where  the  cars  are,  what  line  they  have  been 
delivered  to,  and  we  figure  the  mileage  each  month  for  ourselves. 

Mr.  Day.  From  the  railroad  companies  or  any  transportation  com- 
pany do  you  get  any  compensation  for  the  use  of  your  cars  other  than 
the  mileage  you  have  mentioned? 

Mr.  McKoNE.  No,  sir. 

Mr.  Day.  Have  you  had  to  deal  with  the  securing  of  rates  on  the 
transportation  of  packing-house  products  during  the  past  six  months. 

Mr.  McKoNE.  We  have  not  shipped  any. 

Mr.  Day.  Out  of  Kansas  City? 

Mr.  MoKoNE.  No,  sir. 

Mr.  Day.  Or  dressed  beef? 

Mr.  McKoNE.  No,  sir. 

Mr.  Day.  Your  works  here  were  destroyed  by  fire? 

Mr.  McKoNE.  September  2,  1899. 

Mr.  Day.  And  have  not  yet  been  restored? 

Mr.  McKoNE.  We  have  not  killed  a  hoof  of  any  kind  of  stock  since 
the  fire. 

Mr.  Day.  Where  is  the  nearest  packing  house  of  the  Jacob  Dold 
(3ompany? 

Mr.  MoKoNE.  We  have  one  at  Wichita,  Kans.,  and  one  at  Buffalo, 
N.  Y. 

Mr.  Day.  Have  you  had  anything  to  do  with  the  securing  of  rates 
during  the  past  six  months  on  traffic  from  the  Wichita  house? 

Mr.  McKoNE.  No,  sir. 

Mr.  Day.  Who  has  been  dealing  with  that  subject  for  your  company? 

Mr.  McKoNE.  There  is  a  man  by  the  name  of  F.  Miller. 

Mr.  Day.  What  is  his  title? 

Mr.  McKoNE.  Well,  he  is  salesman  and  general  utility  man. 


APPENDIX   O.  259 

Mr.  Day.  What  is  his  first  uamet 

Mr.  McKoNE.  Frank. 

Mr.  Day.  Where  does  he  live? 

Mr.  McKoNE.  At  Wichita. 

Mr.  Day.  Traffic  destined  for  Atlantic  seaports  or  points  on  or  near 
the  Atlantic  coast,  taking  the  New  York,  Philadelphia,  or  Boston  rates, 
coming  from  your  Wichita  house,  does  that  come  by  the  Kansas  City 
gateway  ? 

Mr.  McKoNE.  Yes,  sir;  it  would  necessarily  be  obliged  to  come  here 
or  go  through  St.  Joseph,  or  pass  at  points  below  here  on  the  Missouri 
Pacific. 

Mr.  Day.  You  know  nothing  regarding  what  rates  have  been  secured 
on  that  traffic? 

Mr.  McKoNE.  No,  sir. 

Mr.  Day.  You  have  had  nothing  whatever  to  do  with  the  securing  oi 
rates  for  the  Jacob  Dold  Packing  Company  since  when? 

Mr.  McKoNE.  Since  September,  1899. 

Mr.  Day.  I  think  that  is  all  I  wish  to  ask  Mr.  McKone. 

There  being  no  further  questions,  the  witness  was  excused. 

F.  M.  Gault,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  is  your  official  relation  to  fast-freight  lines  or  rail- 
roads, Mr.  Gault? 

Mr.  Gault.  I  am  agent  for  the  Lehigh  and  Wabash  Despatch? 

Mr.  Day.  What  roads — railroads — do  the  Lehigh  and  Wabash  operate 
over? 

Mr.  Gault.  The  Wabash  and  the  Lehigh  Valley. 

Mr.  Day.  What  work  have  you  performed  for  that  line  here  daring 
the  past  six  months?    What  has  been  the  general  scope  of  your  work? 

Mr.  Gault.  Principally  soliciting  west-bound  business. 

Mr.  Day.  West-bound  business? 

Mr.  Gault.  Yes,  sir;  west  bound. 

Mr.  Day.  Have  you  anything  to  do  with  the  soliciting  of  packing- 
house  products  or  dressed  beef? 

Mr.  Gault.  No,  sir. 

Mr.  Day.  Have  you  solicited  any? 

Mr.  Gault.  No,  sir. 

Mr.  Day.  Or  quoted  any  rates  on  any? 

Mr.  Gault.  No,  sir. 

Mr.  Day.  Do  you  quote  rates  out  on  east-bound  traffic? 

Mr.  Gault.  Yes,  sir;  I  do  whenever  I  have  inquiries  or  whenever  I 
can  locate  east-bound  business. 

Mr.  Day.  Have  you  bad  any  inquiries  for  rates  on  packing-house 
products  or  dressed  beef  within  the  last  six  months? 

Mr.  Gault.  No,  sir;  I  have  not. 

Mr.  Day.  Nor  have  you  quoted  any? 

Mr.  Gault.  No,  sir. 

Mr.  Day.  From  whom  do  you  get  your  rates  that  you  quote— the 
tariffs? 

Mr.  Gault.  From  our  manager's  office,  Mr.  M.  L.  Dougherty,  of 
Detroit. 

Mr.  Day.  He  is  manager  of  the  Lehigh  and  Wabash  Despatch? 

Mr.  Gault.  Yes,  sir. 

Mr.  Day.  From  any  other  do  you  get  rates  or  tariffs? 

Mr.  Gault,  Occasionally  from  the  Wabash  Eailroad. 


260  APPENDIX   G, 

Mr.  Day,  Do  you  get  any  from  the  Central  Freight  Association  or 
its  chairman,  Mr.  Tucker? 

Mr.  Gault.  Xo,  sir. 

Mr.  Day.  Or  fi'om  any  other  freight  association  t 

Mr.  Gault.  No,  sir. 

Mr.  Day.  Have  you  seen  that  informal  or  unofficial  tariff  on  export 
traffic  which  quotes  a25-cent  rate  east  of  Chicago? 

Mr.  Gault.  No,  sir. 

Mr.  Day.  Have  you  heard  of  it? 

Mr.  Gault.  I  never  heard  of  it. 

Mr.  Day.  Or  a  29  cent  rate  from  St.  Louis  or  the  Mississippi  Eiver? 

Mr.  Gault.  No,  sir. 

Mr.  Day.  On  export  traffic? 

Mr.  Gault.  No,  sir. 

Commissioner  Prouty.  Does  your  line  issue  a  bill  of  lading  from 
here  to  New  York? 

Mr.  Gault.  We  would  if  we  were  called  on. 

Commissioner  Prouty.  You  would  not  ask  anybody  for  the  chance, 
but  if  they  came  and  asked  you  to  you  would  do  it? 

Mr.  Gault.  If  any  shipment  moved  over  our  line  and  they  wished 
to  surrender  the  railroad  bill  of  lading,  we  would  issue  our  bill  of  lading 
in  lieu  of  that. 

Commissioner  Prouty.  Have  you  done  that? 

Mr.  Gault.  Not  on  packing  house  business.  We  have  not  handled 
any. 

Commissioner  Clements.  Why  do  you  not  get  any  of  that  business? 
Is  it  because  yon  do  not  want  it,  do  not  solicit  it? 

Mr.  Gault.  That  is  it.  The  understanding  is,  and  my  instructions 
are,  to  look  after  west-bound  business,  and  I  am  required  fo  be  out  of 
Kansas  City  two  thirds  of  the  time;  consequently  1  could  not  keep  in 
touch  with  the  packers. 

Commissioner  Prouty.  Do  you  know  who  represents  the  Lehigh 
Valley  and  Wabash  in  soliciting  packing-house  freight  here  in  Kansas 
City? 

Mr.  Gault.  They  have  not  handled  any  and  I  do  not  know  of  any- 
body soliciting  it. 

Commissioner  Prouty.  You  mean  the  roads  have  not  handled  any; 
the  Wabash  and  Lehigh  Despatch,  made  up  of  the  Lehigh  and  Wabash 
roads,  have  not  handled  any  packing-house  business  since  1899? 

Mr.  Gault.  Yes,  sir. 

Commissioner  Clements.  It  does  move  over  the  Wabash  road  away 
from  here,  does  it  not? 

Mr.  Gault.  I  have  no  knowledge  of  it. 

Commissioner  Clements.  Well,  what  is  your  general  information? 

Mr.  Gault.  I  would  have  no  information  except  it  moved  over  the 
Wabash  and  Lehigh  Valley  both. 

Commissioner  Fifer.  Have  you  any  idea  what  roads  carry  the  bulk 
of  this  packing-house  business  to  the  East? 

Mr.  Gault.  1  have  no  information  in  regard  to  that. 

Commissioner  Fifer.  That  is  all. 

The  witness  was  excused. 

W.  N.  Marshall,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  is  your  occupation? 

Mr.  Marshall.  Agent  for  the  Nickel  Plate  Line. 

Mr.  Day.  Any  other  line? 


APPENDIX    a. 


261 


Mr.  Marshall.  No,  sir. 

Mr.  Day.  Tliat  is  a  fast  freight  Hue? 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  Over  wLat  railroads  does  the  Nickel  Plate  Line  operate? 

Mr.  Marshall.  Well,  it  operates  over  any  line  up  to  the  Mississippi 
River  that  we  can  secure  the  business  over;  then  it  operates  over  the  Big 
Four  out  of  East  St.  Louis;  it  operates  over  the  Lake  Erie  and  West- 
ern out  of  Bloomington,  and  over  the  New  York,  Chicago  and  St.  Louis 
out  of  Chicago.  The  New  York,  Chicago  and  St.  Louis  forms  the  line 
to  Buffalo.  East  of  Buffalo  it  operates  over  the  West  Shore;  Boston 
and  Maine;  Ne-w  Yorkj  New  Haven  and  Hartford,  and  the  Philadelphia 
and  Reading. 

Mr.  Day.  How  long  have  you  been  agent  for  that  Hue  here? 

Mr.  Marshall.  About  three  and  a  half  years. 

Mr.  Day.  During  the  past  month  have  you  secured  any  packing- 
house products? 

Mr.  Marshall.  I  could  not  say  as  to  the  exact  time. 

Mr.  Day.  Well,  withiu  the  last  two  months? 

Mr.  Marshall.  Yes,sir;  within  the  last  two  months  we  have. 

Mr.  Day.  Have  you  solicited  the  traffic? 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  How  many  people  have  you  in  your  employ? 

Mr.  Marshall.  I  have  a  clerk  and  stenographer. 

Mr.  Day,  What  are  the  functions  of  the  clerk? 

Mr.  Marshall.  Well,  he  does  the  clerical  work  of  the  office. 

]\lr.  Day.  You  quote  the  rates? 

Mr.  Marshall.  Yes,  sir. 

]Mr.  Day.  From  what  source  do  you  get  your  rates? 

Mr.  Marshall.  From  the  tariffs. 

Mr.  Day.  Who  furnishes  you  with  the  tariffs? 

Mr.  Marshall.  Well,  I  use  the  different  rates  of  the  Western  lines 
principally  on  through  business.  They  publish  tariffs  to  the  Missis- 
sippi River  and  I  use  them. 

Mr.  Day.  From  what  source  do  you  get  them? 

Mr.  Marshall.  We  secure  them  from  the  agents  of  the  Western 
roads. 

Mr.  Day.  Did  you  hear  anything  of  this  tariff"  I  have  mentioned 
here;  this  unofficial  tariff  of  29  cents  from  the  Mississippi  River  to  New 
York  and  25  cents  east  of  Chicago? 

Mr.  Marshall.  I  have  not  heard  of  any  tariff. 

Mr.  Day.  Or  rate? 

Mr.  Marshall.  I  have  heard  of  the  rate. 

Mr.  Day.  Have  you  seen  a  copy  of  the  paper? 

Mr.  Marshall.  No,  sir;  I  have  not.    There  is  not  any  tariff. 

Mr.  Day.  I  am  speaking  of  a  paper,  an  authorization. 

Mr.  Marshall.  Yes,  sir;  I  have. 

Mr.  Day.  Where  did  you  get  that? 

Mr.  Marshall.  I  received  notice  from  some  official  of  the  Lake  Erie 
and  Western  road  stating  that  after  the  1st  of  March  or  10th  of  March 
they  would  not  accept  anything  less  than  their  regular  proportion  of  a 
minimum  rate  of  29  cents  from  the  Mississippi  River  on  export  provi- 
sions. 

Mr.  Day.  What  was  the  published  tariff  from  the  Mississippi  River 
to  New  York  at  that  time? 

Mr.  Marshall.  Thirty  five  cents  on  domestic  provisions.  There  is 
none  issued  on  exi)ort  provisions. 


262  APPENDIX   O. 

Mr.  Day.  Did  you  carry  any  export  traffic  the  last  month? 

Mr.  Marshall.  Yes,  sir — well,  I  would  not  say  as  to  the  last  month. 
You  asked  a  while  ago  as  to  the  last  two  months. 

Mr.  Day.  Well,  the  last  two  months? 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  At  what  rate  did  you  take  that! 

Mr.  Marshall.  I  took  that,  I  think,  at  27^  cents  from  the  Mississippi 
Eiver. 

Mr,  Day.  Did  you  carry  any  domestic  traffic  at  a  lower  rate  than  the 
published  rate'? 

Mr.  Marshall.  Ko,  sir. 

Mr.  Day.  Did  you  carry  any  domestic  traffic  at  allt 

Mr.  Marshall.  No,  sir. 

Mr.  Day.  How  do  you  determiue  when  traffic  is  offered  you  for  export 
that  it  is  in  fact  exjjort  traffic? 

Mr.  Marshall.  We  require  them  to  furnish  us  a  bill  of  lading  from 
the  Western  line  showing  that  it  is  for  export.  It  contains  the  export 
marks  and  states  what  steamship  line  it  goes  by  and  what  port  it  is 
cleared  from  and  the  date  generally  of  the  sailing  of  that  steamer. 

Mr.  Day.  That  is  shown  in  the  bill  of  lading  issued  by  the  initial 
line? 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  You  take  up  that  bill  of  lading  and  issue  a  new  onet 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  And  you  issue  a  new  bill  of  lading  to  a  foreign  port? 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  And  the  rate  you  made  up  of  27^  cents  from  the  Mississippi 
Eiver  ])lus  the  ocean  rate  to  the  point  of  destination? 

Mr,  Marshall.  And  plus  the  rate  west  of  the  Mississippi  River. 

Mr.  Day.  Now,  what  route  did  that  traffic  take  out  of  here? 

Mr.  Marshall.  That  went  over  the  O.,  K.  C.  &  B.  from  here  to 
Quincy,  and  at  Quincy  it  took  the  0.,  B.  &  Q.  to  Peoria;  from  Peoria 
it  went  over  the  Lake  Erie  and  Western  to  Fostoria,  and  from  h'ostoria 
it  went  over  the  Nickel  Plate  to  Buffalo;  from  Buffalo  to  Ivotterdam 
Junction  over  theW^est  Shore,  and  then  over  the  Boston  and  Maine. 

Mr.  Day.  How  much  was  there  of  that  traffic? 

Mr.  Marshall.  About  fourteen  cars. 

Mr.  Day.  Whose  traffic  was  it? 

Mr.  Marshall,  Fowler's. 

Mr.  Day.  Who  did  you  negotiate  with  representing  Fowler  for  that 
traffic? 

Mr.  Marshall.  I  did  not  negotiate  with  Fowler  at  all.  I  negotiated 
with  the  Western  road. 

Mr.  Day.  Who  did  you  quote  the  rate  to? 

Mr.  Marshall.  I  quoted  the  rate  to  Mr.  Moore. 

Mr.  Day.  Who  is  he? 

Mr.  Marshall.  Assistant  general  freight  agent. 

Mr.  Day.  Of  the  Kansas  City  connecting  road? 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  What  rate  was  quoted  up  to  the  Mississippi  River  in  that 
deal? 

Mr.  Marshall.  I  could  not  tell  you. 

Mr.  Day.  Mr.  Moore  negotiated  with  the  packer? 

Mr.  Marshall.  For  a  through  rate. 

Mr.  Day.  And  you  negotiated  with  Mr.  Moore  for  a  rate  east  of  the 
Mississippi  River? 


APPENDIX   G.  263 

Mr.  Marshall.  Tes,  sir. 

Mr.  Day.  Now,  who  were  the  charges  paid  tot 

Mr.  Marshall.  They  were  paid  to  him. 

Mr.  Day.  Was  the  traftic  prepaid  all  the  way  through? 

Mr.  Marshall.  I  could  not  say  as  to  that. 

Mr.  Day.  What  was  the  agreement? 

Mr.  Marshall.  I  will  take  that  back.  The  inland  charges  were  paid 
on  some  of  it,  and  I  think  they  were  paid  all  the  way  through  on  some 
of  the  other  stuff. 

Mr.  Day.  And  prepaid  here? 

Mr.  Marshall.  Yes,  sir;  they  were  prepaid  to  Mr.  Moore,  and  he 
prepaid  to  me  east  of  the  Mississippi  Eiver. 

Mr.  Day.  Well,  are  there  any  other  instances  that  you  remember  of 
like  character  or  similar  character  within  the  past  six  months? 

Mr.  Marshall.  Well,  there  may  have  been  and  probably  were,  but 
I  can  not  just  remember  any  specific  case  just  now. 

Mr.  Day.  Generally  that  was  the  form  of  procedure? 

Mr.  Marshall.  Yes,  sir;  export  rates  have  never  been  maintained 
out  of  Kansas  City  on  provisions  and  never  will  be.  They  can  not  be 
maintained.  There  is  no  system  by  which  you  can  make  an  inflexible 
rate  on  export  provisions  out  of  Kansas  City.    It  can  not  be  done. 

Commissioner  Prouty.  Why  not? 

Mr.  Marshall.  Well,  we  have  to  meet  the  competition  of  New 
Orleans,  Savannah,  Charleston,  and  all  those  ports;  Newport  News, 
Norfolk,  and  everywhere  else,  and  if  we  want  to  get  any  share  of  the 
business  we  have  to  meet  the  rate  made  by  those  ports. 

Commissioner  Prouty.  If  you  make  an  inflexible  rail  rate  to  all 
ports,  would  not  Boston  and  New  York  take  their  share  of  that  busi- 
ness? 

Mr.  Marshall.  No,  sir;  they  would  not  get  it. 

Commissioner  Prouty.  The  ships  there  are  not  anxious  enough  for 
that  kind  of  traflic  to  take  it? 

Mr.  Marshall.  The  inland  rate  cuts  the  figure. 

Commissioner  Prouty.  Suppose  the  inland  rate  was  absolutely 
fixed  ? 

Mr.  Marshall.  If  you  fix  the  same  inland  rate  to  New  Orleans  and 
the  oceao  rate  was  the  same,  it  could  be  maintained. 

Commissioner  Prouty.  But  the  ocean  rate  is  not  the  same.     Sup- 
pose you  gentlemen  maintain  an  inflexible  rate,  would  not  ocean  com 
petition  then  divide  up  this  traffic  in  as  equitable  a  way  as  railroad 
competition  does  now? 

Mr.  Marshall.  I  do  not  think  it  would. 

Commissioner  Prouty.  Have  you  any  reason  to  suppose  it  would 
not? 

Mr.  Marshall.  Yes,  sir. 

Commissioner  Prouty.  State  what  it  is. 

Mr,  Marshall.  Well,  there  are  steamers  that  go  out  of  New  Orleans 
and  the  Southern  ports  with  light  tonnage.  There  are  more  tramp 
steamers  coming  to  those  ports  than  the  Northern  ports,  and  they  will 
take  business  for  almost  anything.  I  have  heard  of  a  rate,  and  have 
reason  to  suppose  it  was  made,  on  which  some  export  business  moved 
from  Kansas  City  to  Hamburg,  and  that  business  moved  at  a  lower 
rate  through  from  Kansas  City  through  to  Hamburg  than  the  inland 
rate  from  Kansas  City  to  Baltimore. 

Commissioner  Yeomans.  On  domestic! 

Mr.  Marshall.  Yes,  sir. 


264  APPENDIX  a. 

Commissioner  Prouty.  Now,  the  testimony  in  other  cases  has  been 
that  the  cheapest  rates  have  been  secured  by  regular  line  steamers, 
not  tramp  steamers. 

Mr.  Marshall.  That  is  the  case  where  you  have  no  tramp  steamers, 
but  I  have  had  some  experience  with  export  business  from  Fernaudina, 
Fla.,  and  Savannah,  Ga.,  in  the  phosphate  business.  That  is  aside 
from  packing-house  products,  but  the  same  rule  will  govern.  I  have 
knowu  of  vessels  to  come  to  Fernaudina  partly  loaded  and  go  to  Savan- 
nah and  take  turpentine,  for  instance,  for  ballast. 

Commissioner  Prouty.  The  statement  you  make  is  often  made,  and 
1  wanted  to  get  at  why  it  was  not  possible  to  maintain  a  fixed  inland 
rate  and  let  the  ocean  competition  divide  the  traffic.  Now  you  seek 
and  virtually  engage  the  ocean  carrier. 

Mr.  Marshall.  We  do  to  a  certain  extent,  but  very  frequently  the 
ocean  steamers  make  a  lower  rate.  I  have  known  ocean  steamship 
companies  to  reduce  their  rate  on  exportpacking  house  products  where 
we  would  ask  special  quotations.  For  instance,  I  was  accustomed  to 
getting  a  line  of  rates  from  our  foreign  freight  agents  from  New  York 
and  Boston  every  Saturday  or  Monday  morning,  and  I  would  furnish 
them  to  packers.  These  rates  were  made  for  a  certain  clearance  from 
the  seaboard  and  I  would  notify  the  packers  of  the  rates  and  the  clear- 
ance. They  would  probably  come  back  and  say,  "  Here,  I  can  use" — if 
they  were  making  a  20  shilling  rate  to  Christiania — they  would  say,  "I 
can  use  a  17.6  rate  if  you  can  get  it."  I  would  offer  the  steamship  com- 
pany the  business  at  that  rate  and  they  would  accept  it.  That  is  fre- 
quently done. 

Commissioner  Prouty.  Do  you  negotiate  mostly  with  the  packers 
or  the  railroads  that  lead  out  of  Kansas  City? 

Mr.  Marshall.  Generally  the  packers. 

Commissioner  Prouty.  Do  you  have  any  line  out  of  Kansas  City 
over  which  you  oj^erate? 

Mr.  Marshall,  No;  any  of  them. 

Commissioner  Prouty,  If  a  packer  told  you  what  kind  of  a  rate  you 
could  ship  on,  you  would  go  around  to  these  men  at  Kansas  City  and 
try  to  get  a  combination  to  move  the  stuff?     Is  that  right? 

Mr.  Marshall.  No;  I  have  at  times  asked  a  Western  road  what 
kind  of  a  rate  they  would  make  on  so  many  cars,  but  not  frequently. 

Commissioner  Prouty.  Do  you  understand  that  the  rates  from  here 
to  the  Mississippi  Kiver  have  been  maintained? 

Mr,  Marshall.  I  understand  they  have  been. 

Commissioner  Prouty.  And  what  cutting  has  been  done  has  been 
done  east  of  the  Mississippi  River? 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  What  evidence  have  you  that  this  traffic  billed  for  export 
is  not  diverted  at  the  coast  for  Atlantic  seaboard  use? 

Mr.  Marshall.  Simply  the  fact  that  the  bill  of  lading — the  initial 
line  bill  of  lading — I  issue  the  export  bill  on  it  and  send  to  our  foreign 
freight  agent,  together  with  a  manifest  of  the  slutt"  to  the  steamship 
company.    That  is  as  far  as  my  knowledge  of  the  business  goes. 

Mr.  Day.  Have  you  any  reason  to  suppose  that  in  instances  it  is 
diverted  at  the  coast  and  not  exported  in  fact? 

Mr.  Marshall.  No,  I  have  not.    I  never  knew  a  case  of  that  kind. 

Mr.  Day,  Take  this  instance  you  have  given  here  of  14  cars,  which 
1  understand  you  to  say  is  an  example  of  the  way  the  business  is 
transacted  for  export 

Commissioner  Clements.  Was  that  all  for  export? 


A1>PENDIX   Q.  265 

Mr.  Marshall.  Yes,  sir. 

Mr.  Day.  Was  the  rate  named  in  the  bill  which  you  issued  in  taking 
up  the  local  billing? 

Mr.  Marshall.  In  the  export  bill  of  lading? 

Mr.  Day.  Yes. 

Mr.  Marshall.  In  some  cases  the  ocean  rate  was  inserted  in  the 
bill  of  lading  and  the  inland  charges  prepaid,  marked  prepaid  on  that 
bill. 

Mr.  Day.  And  in  other  instances? 

Mr.  Marshall.  In  the  other  instances  all  charges  were  prepaid, 
both  the  inland  and  the  ocean. 

Commissioner  Clements.  Why  was  that  difference  made?  Why 
was  some  prepaid  to  the  ocean  and  some  all  the  way? 

Mr.  Marshall.  Well,  that  is  something  I  know  nothing  about,  but 
I  presume  it  is  caused  by  the  fact  that  the  packer  sells  the  stuff  at  the 
seaboard. 

Commissioner  Clements.  But  this  was  all  for  export. 

Mr.  Marshall.  Yes,  sir;  he  sells  it  delivered  at  the  seaboard,  and 
the  consignee  accepts  it  subject  to  ocean  charges. 

Commissioner  Clements.  What  is  there  to  prevent  him  selling  it  to 
somebody  at  the  seaboard  and  not  have  it  go  farther,  and  not  pay  any 
more? 

Mr.  Marshall.  Well,  I  do  not  know  that  there  is  anything  to  pre- 
vent him  if  he  wants  to  do  it  and  railway  companies  will  allow  him,  but 
I  have  never  had  an  instance  arise  where  we  have  not  got  the  clearance 
advices  from  the  seaboard.  We  always  get  from  the  seaboard  agents 
telegraphic  advices,  confirmed  by  mail,  that  these  different  shipments 
on  which  our  bill  of  lading  is  out  have  cleared  on  certain  steamers. 

Commissioner  Clements.  Do  you  not  think  it  likely  where  railroads 
pay  rebates  to  get  shipments  and  where  shippers  are  willing  to  accept 
them  that  both  parties  would  be  willing  to  bill  at  the  foreign  rate  to 
seaboard  and  then  take  it  out  there? 

Mr.  Marshall.  No;  I  do  not. 

Commissioner  Clements.  Do  you  not  think  that  the  same  set  of 
fellows  that  would  do  one  thing  would  do  the  other"? 

Mr.  Marshall.  I  do  not  think  the  railroads  would  do  business  that 
way.  If  they  want  to  cut  a  rate,  they  will  cut  it  outright,  and  will  not 
let  all  the  people  in  creation  know  about  it. 

Commissioner  Clements.  Well,  if  they  did  not  want  everybody  to 
know  it,  would  not  that  be  as  convenient  a  way  as  any? 

Mr.  Marshall.  Well,  it  could  be  done  that  way,  but  I  know  of  no 
instance  where  it  has  been  done. 

Commissioner  Clements.  Now,  as  a  matter  of  history — you  have 
been  in  the  business  at  Fernandina  and  other  places,  and  doubtless 
know  the  ways  of  shippers,  and  railroads  as  well — it  is  true  that  in 
times  past  rates  have  been  very  much  demoralized,  traffic  moving  at 
less  than  the  published  rates. 

Mr.  Marshall.  I  have  heard  that. 

Commissioner  Clements.  Did  you  not  believe  it?  Were  you  not 
satisfied  that  it  was  so? 

Mr.  Marshall.  It  was  on  export,  but  I  never  knew  the  time  that 
we  ever  had  cases  up  where  we  had  to  pay  on  domestic  business. 

Commissioner  Clements.  I  am  not  asking  now  for  particular  in- 
stances of  your  traffic,  but  in  regard  to  the  general  situation  in  regard 
to  domestic  as  well  as  foreign.     Has  there  not  been  at  times  in  the  last 


266  APPENDIX  a. 

few  years  a  period  when  it  was  generally  known  to  a  moral  certainty 
that  rates  were  not  being  maintained? 

Mr.  Marshall.  Oh,  yes,  sir. 

Commissiouer  Clements.  So  there  is  no  mistaking  a  couditiou  of 
tbat  sort  by  a  practical  railroad  man  such  as  you  when  it  comes  about. 
You  always  know  when  that  condition  is  prevailing? 

Mr.  Marshall.  Well,  there  are  certain  people  in  the  railroad  world 
who  have  an  idea  that  rates  are  always  demoralized.  They  are  not 
able  to  get  the  business  that  they  think  they  ought  to  get  against  com- 
petitors, and  are  alwaj^s  accusing  them  of  cutting  rates.  That  does  not 
follow  that  such  a  situation  exists.  This  man  may  not  be  as  clever, 
may  not  be  as  well  liked,  may  not  have  as  many  cigars  to  bnru  up  as 
the  other  man,  and  may  not  get  the  business. 

Commissioner  Clements.  All  those  things  count.  One  is  a  good 
politician  and  the  other  is  not.  Still  it  is  a  fact  that  a  practical  rail- 
road man  in  the  business,  hustling  for  all  the  business  he  can  get, 
knows  when  a  condition  of  that  sort  exists. 

Mr.  ]\Iarshall.  Yes,  sir;  he  should  if  he  is  ui)  to  his  business. 

Commissioner  Clements.  Before  it  goes  on  long. 

Mr.  Marshall.  Yes,  sir;  if  he  knows  his  business  he  ought  to 
determine. 

Commissioner  Clejnients.  You  have  been  through  a  period  of  that 
sort  here,  have  you  not? 

Mr.  Marshall.  Yes,  sir;  I  have. 

Commissioner  Clements.  You  have  seen  it  when  it  got  back  for  a 
time  to  where  everybody  was  trying  to  maintain  the  rate? 

Mr.  Marshall.  Yes,  sir. 

Commissioner  Clements.  Well,  now,  what  has  been  the  condition 
the  last  three  or  four  mouths,  according  to  your  best  judgment  and 
knowledge  of  the  situation  ? 

Mr.  Marshall.  Well,  the  situation  on  export  business 

Commissioner  Clements.  I  am  not  asking  you  for  particular  detailed 
facts,  but  how  is  the  situation  in  general? 

Mr.  Marshall.  Well,  Mr.  Clements,  we  are  not  in  the  market  for 
domestic  business.  We  do  not  want  it.  I  have  been  instructed  not  to 
solicit  it  at  tariff  rates,  so  I  am  not  in  a  position  to  say  what  the  situa- 
tion is  as  to  that.  We  have  also  been  practically  out  of  the  market  for 
months  for  any  provision  business. 

Commissioner  Clements.  You  mean  dressed  beef? 

Mr.  Marshall.  Yes,  sir;  we  do  not  want  dressed  beef  or  packing- 
house products;  have  not  wanted  them  for  months.  Our  connections 
east  have  been  blocked.  The  Fitchbnrg  road  has  been  blocked  and 
traffic  I  had  secured  had  to  be  diverted  to  other  lines — has  gone  over 
the  Boston  and  Albany  instead  of  the  P'itchburg.  The  West  Shore 
and  New  York  Central  have  been  blocked  with  grain  and  flour  from 
the  Northwest  for  months,  and  they  did  not  want  this  business,  and  I 
have  not  been  in  a  position  to  go  after  it  at  all  or  secure  it;  conse- 
quently I  am  not  in  a  i^osition  to  tell  you  what  the  situation  on  jjacking- 
house  business  has  been  since  last  October.  Right  at  the  present  time 
my  instructions  are  to  take  no  packing-house  products  at  all.  We  do 
not  want  them.  As  far  as  the  Nickel  Plate  road  is  concerned — Judge 
Day  spoke  about  that  29-cent  rate  from  the  Mississippi  River — as  far 
as  the  Nickel  Plate  is  concerned,  they  are  not  a  party  to  that.  They 
will  not  accept  this  29J  cents  from  the  Mississippi  River. 

Commissioner  Clements.  What  business  are  you  here  for?  What 
business  do  you  solicit? 


APPENDIX   G.  267 

Mr.  Marshall.  I  am  not  soliciting  much  of  anything,  on  account  of 
this  blockade,  but  I  go  after  everything  iu  sight  when  I  am  prepared 
to  handle  it.  Some  export  business  that  went  out  of  here  in  August 
did  not  reach  the  seaboard  until  February.  That  will  give  you  an  idea 
of  what  kind  of  condition  they  were  in. 

Commissioner  Clements.  That  is  all. 

There  being  no  further  questions  the  witness  was  excused. 

Commissioner  Clements.  We  will  suspend  until  2  o'clock. 

At  12.35  o'clock  p.  m.  the  Commission  took  a  recess  until  2  o'clock  p.  m. 

AFTER  RECESS. 

2  o'clock  p.  M. 

Commissioner  Clements.  Who  will  you  call  next,  Mr.  Day? 
Mr.  Day.  Mr.  H.  C.  Golden. 

H.  C.  Golden,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  Mr.  Golden,  what  fast  freight  line  are  you  agent  for  here? 

Mr.  Golden.  The  Star  Union. 

Mr.  Day.  How  long  have  you  been  connected  with  the  Star  Union  ? 

Mr.  Golden.  Some  seventeen  years. 

Mr.  Day.  How  long  have  you  been  here? 

Mr.  Golden.  Four  years. 

Mr.  Day.  Eegarding  packing-house  products  and  dressed  beef,  has 
your  line  been  carrying  these  products? 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  Within  the  last  six  months? 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  For  domestic  or  export,  or  both  ? 

Mr.  Golden.  Principally  domestic. 

Mr.  Day.  What  road  does  your  line  operate  overt 

Mr.  Golden.  Over  the  Pennsylvania  system. 

Mr.  Day.  How  from  here? 

Mr.  Golden.  Over  any  of  the  lines  from  here. 

Mr.  Day.  And  the  Pennsylvania  by  way  of  Chicago  or  St.  Louis? 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  At  either  Chicago  or  St.  Louis  it  meets  the  Pennsylvania 
lines? 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  At  what  rate  during  the  months  of  eJanuary  and  February 
did  you  take  traffic  to  New  York  from  here — tbat  traffic  named? 

Mr.  Golden.  Domestic? 

Mr.  Day.  Domestic;  yes,  sir;  dressed  beef  or  packing-house  products. 

Mr.  Golden.  At  the  tariff. 

Mr.  Day.  Have  you  made  any  concessions  from  the  tariff? 

Mr.  Golden.  Not  on  domestic  business. 

Mr.  Day.  You  maintained  the  tariff  rates? 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  Now,  on  export  business  how  have  you  made  up  your  rates  ? 

Mr.  Golden.  We  have  taken  some  export  business  on  a  basis  of  the 
through  rate  named  from  the  Mississippi  Eiver,  including  the  ocean 
rate. 

Mr.  Day.  What  do  you  mean  by  the  through  rate  from  the  Mississippi 
River? 

Mr.  Golden.  The  rate  from  the  Mississippi  River,  including  the  ocean 
rate,  would  make  the  through  rate. 


268  APPENDIX   Q. 

Mr.  Day.  What  was  the  rail  rate  from  the  Mississippi  River  to  tide 
water  which  you  collected  for  the  inland  haul? 

Mr.  Golden.  Twenty  nine  cents. 

Mr.  Day.  The  published  tariff  rate  at  that  time  was  35  cents,  was  it 
not? 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  Where  did  you  get  your  instructions  to  carry  export  from 
the  Mississippi  Kiver  at  the  29-cent  rate? 

Mr.  Golden.  There  were  no  specific  instructions. 

Mr.  Day.  Your  authority,  then  ? 

Mr.  Golden.  In  Chicago  the  matter  was  talked  over  among  our 
oflicials  and  I  was  asked  wliat  was  the  going  rate,  I  figured  it  to  be 
about  29  cents  and  I  took  the  property  on  that  rate.  There  were  no 
written  instructions  to  that  effect. 

Mr.  Day.  You  had  no  written  authority  or  no  written  consent  I 

Mr.  Golden.  No,  sir. 

Mr.  Day.  Or  paper  or  statement? 

Mr.  Golden.  No,  sir. 

Mr.  Day.  What  was  the  rate  east  of  Chicago? 

Mr.  Golden.  Our  proportion  of  the  through  rate? 

Mr.  Day.  Of  which  rate? 

Mr.  Golden.  Of  the  29  cents. 

Mr.  Day.  Which  was  about  what — 25? 

Mr.  Golden.  Eighty  per  cent,  first  deducting  the  terminals  of  3 
cents. 

Mr.  Day.  At  Chicago  or  at  New  York? 

Mr.  Golden.  At  New  York. 

Mr.  Day.  And  you  took  your  export  traffic  from  any  port  on  the  same 
basis— Boston  29? 

Mr.  Golden.  I  did  not  take  any  to  Boston. 

Mr.  Day.  What  was  the  rate  to  Philadelphia? 

Mr.  Golden.  Twenty-seven. 

Mr.  Day.  Just  the  usual  differential? 

Mr.  Golden.  Yes,  sir;  the  differential. 

Mr.  Day.  And  Baltimore? 

Mr.  Golden.  I  did  not  take  any  to  Baltimore.  It  would  have  been 
26  cents. 

Mr.  Day.  Three  cents  differential? 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  What  is  the  rate  now  on  export  that  you  are  contracting 
now  to  carry  it  for? 

Mr.  Golden.  I  am  not  contracting.     I  can  not  get  it. 

Mr.  Day.  Do  you  seek  to  get  it  at  that  rate? 

Mr.  Golden.  I  have  been;  yes,  sir. 

Mr.  Day.  And  do  not  get  any? 

Mr.  Golden.  No,  sir. 

Mr.  Day.  Do  you  get  any  domestic? 

Mr.  Golden.  I  get  domestic  right  along. 

Mr.  Day.  That  pays  the  full  tariff"  rate? 

Mr.  Golden.  The  full  tariff"  rate. 

Commissioner  Prouty.  By  what  line  is  the  export  business  going 
now  ? 

Mr.  Golden.  I  do  not  know;  I  can  not  say. 

Commissioner  Prot'TY.  By  what  lines  does  your  traffic  leave  Kansas 
City? 

Mr.  Golden.  It  left  by  different  lines. 


APPENDIX  a.  269 

Commissioner  Prouty.  Do  you  know  what  the  rate  is  between  here 
and  the  Mississippi  River? 

Mr.  Golden.  I  do  not. 

Commissioner  Prouty.  Did  you  make  that  contract  with  the  packing- 
house shippers'? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Prouty.  Were  you  not  obliged  to  name  him  a  rate 
irom  Kansas  City  ? 

Mr.  Golden.  Ko,  sir. 

Commissioner  Prouty.  You  named  a  rate  from  the  Mississippi  River 
and  he  took  care  of  his  own  rate  to  the  Mississippi  River? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Fifer.  Does  your  company  do  business  in  Kansas 
City — that  is,  ship  from  heref 

Mr.  Golden.  No,  sirj  we  have  no  line  entering  Kansas  City — only 
Chicago  and  St.  Louis. 

Mr.  Day.  What  lines  out  of  Kansas  City,  what  initial  line  do  you 
usually  employ? 

Mr.  Golden.  We  have  no  choice. 

Mr.  Day.  What  line  does  the  bulk  of  your  traffic  go  out  over?    What 
line  has  it  gone  over  during  the  last  mouth  or  two  months? 

Mr.  Golden.  I  can  not  say  which  gets  the  most.    It  goes  over  all 
lines. 

Mr.  Day.  How  was  it  prior  to  the  1st  of  January?     What  was  the 
rate  prior  to  the  1st  of  January? 

Mr.  Golden.  The  published  tariff  rate. 

Mr.  Day.  On  domestic? 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  What  was  it  on  export? 

Mr.  Golden.  The  same  as  far  as  I  know. 

Mr.  Day.  There  were  no  concessions  made  prior  to  January  1? 

Mr.  Golden.  No,  sir. 

Commissioner  Prouty.  You  are  talking  of  the  rate  from  the  Missis- 
sippi River  east  altogether? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Prouty.  That  is  the  only  rate  you  know  anything 
about? 

Mr.  Golden.  That  is  the  only  rate. 

Mr.  Day.  You  spoke  of  some  contracts  you  made  for  29  cents  east 
of  the  Mississippi  River  for  export.     How  recently  did  you  make  con 
tracts  of  that  kind? 

Mr.  Golden.  About  the  middle  of  February. 

Mr.  Day.  flow  much  traffic  did  you  get? 

Mr.  Golden.  Simply  four  cars. 

Mr.  Day.  Whose  traffic  was  it? 

Mr.  Golden.  Ruddy  Brothers. 

Mr.  Day.  And  prior  to  that? 

Mr.  Golden.  I  had  none. 

Mr.  Day.  That  is,  since  the  1st  of  January! 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  You  had  no  export  since  the  1st  of  January? 

Mr.  Golden.  That  is  since  January  1.    The  product  I  am  speaking 
of  is  since  the  1st  of  January. 

Mr.  Day.  Did  you  have  any  other  since  January  1  ? 

Mr.  Golden.  No,  sir. 

Mr.  Day.  Did  you  have  any  prior  to  that? 


270  APPENDIX    G. 

Mr.  Golden.  I^o,  sir. 

Mr.  Day.  You  are  carrying  domestic  traffic  right  along  I 

Mr.  Golden.  Yes,  sir. 

Mr.  Day.  That  all  goes  at  the  published  rate? 

Mr.  Golden.  The  established  rate. 

Mr.  Day.  And  no  concessions  are  made  from  the  ratet 

Mr.  Golden.  Under  no  circumstances. 

Commissioner  Prouty.  Do  you  carry  that  domestic  traffic  to  the 
city  of  Kew  Y^ork? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Prouty.  And  to  Philadelphia? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Prouty.  And  Baltimore? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Clements.  What  is  the  rate  now  on  dressed  beef? 

Mr.  Golden.  Sixty  eight  and  one-half  cents  from  Kansas  City  to 
New  York. 

Commissioner  Clements.  And  packing-house  products? 

Mr.  Golden.  Fifty-three  and  a  half  cents. 

Commissioner  Clements.  How  long  has  that  been  the  rate? 

Mr.  Golden.  I  can  not  remember  distinctly,  but  it  is  several  years. 

Commissioner  Clements.  For  several  years  there  has  been  no 
change  in  the  published  rate? 

Mr.  Golden.  No,  sir;  not  to  my  knowledge. 

Commissioner  Clements.  During  that  time  that  has  been  the  rate. 
You  have  been  there  how  long? 

Mr.  Golden.  Four  years. 

Commissioner  Clements.  Has  there  been  a  general  demoralization 
or  departure  from  those  rates  at  some  period  of  time? 

Mr.  Golden.  Not  to  my  knowledge. 

Commissioner  Clements.  Have  you  had  a  general  impression  to 
that  effect  without  having  absolute  knowledge? 

Mr.  Golden.  From  common  report  I  could  say  that  I  hear  of  less 
rates  being  named  on  export. 

Commissioner  Clements.  Well,  leaving  the  export  out  of  the  present? 

Mr.  Golden.  No,  sir ;  I  do  not. 

Commissioner  Clements.  Is  it  your  belief  that  during  three  or  four 
years  that  you  have  been  here  the  published  rates  have  been  adhered 
to  and  collected  and  retained  by  the  carriers  during  all  this  period? 

Mr.  Golden.  On  domestic? 

Commissioner  Clements.  On  domestic. 

Mr.  Golden.  Yes,  sir;  so  far  as  I  know. 

Commissioner  Clements.  Well,  so  far  as  you  believe?  Do  you 
believe  it? 

Mr.  Golden.  Yes,  sir;  I  believe  it  has. 

Commissioner  Clements.  Is  there  any  arrangement,  or  contract,  or 
understanding,  or  any  sort  of  device  between  the  carriers,  the  different 
roads,  and  the  packers,  or  either,  or  part  of  either  class,  whereby  the 
business  from  Kansas  City  in  these  products  is  distributed  or  appor- 
tioned among  the  roads? 

Mr.  Golden.  Not  to  my  knowledge. 

Commissioner  Fifer.  Have  there  been  any  rebates  that  you  know 
of  or  have  heard  of? 

Mr.  Golden.  I  have  never  paid  any,  and  I  do  not  know  of  any  being 
paid  to  my  knowledge.  Of  course,  I  have  nothing  to  do  with  the  west- 
ern lines. 


APPENDIX   Q.  271 

Commissioner  Clements.  Aud  there  is  no  apportionment  of  the 
traffic? 

Mr.  Golden.  Not  to  my  knowledge. 

Commissioner  Clements.  Does  the  road  yon  represent  feel  at  liberty 
to  take  all  the  business  it  can  get  of  this  kind? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Clements.  And  carry  it  and  retain  all  they  get  for  it? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Clements.  Without  any  adjustment  or  division  of 
the  proceeds? 

Mr.  Golden.  Yes,  sir. 

Commissioner  Clements.  That  is  all. 

There  being  no  further  questions,  the  witness  was  excused. 

J.  J.  Collister,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  fast  freight  line  are  you  agent  for? 

Mr.  Collister.  1  am  agent  for  the  Continental  Line  and  Central 
States  Despatch. 

Mr.  Day.  Over  what  roads  does  your  line  operate? 

Mr.  Collister.  Over  the  Baltimore  and  Ohio  Southwestern,  the 
Baltimore  and  Ohio,  the  Central  Railroad  of  New  Jersey,  the  Philadel- 
phia and  Reading,  and  the  New  York,  New  Haven  and  Hartford  and 
their  connections — connections  of  the  Baltimore  and' Ohio  Railroad. 

Mr.  Day.  Have  you  participated  in  the  packing-house  products 
traffic  out  of  Kansas  City  the  last  six  months? 

Mr.  Collister.  Not  in  the  last  six  months. 

Mr.  Day.  Neither  export  nor  domestic? 

Mr.  Collister.    Oh,  yes;  we  get  domestic  business  right  along. 

Mr.  Day.  In  the  domestic  traffic,  have  you  contracted  for  any  at  less 
than  the  published  rates? 

Mr.  Collister.  No,  sir. 

Mr.  Day.  Have  you  carried  any  at  less  than  the  published  rates? 

Mr.  Collister.  Not  at  all. 

Mr.  Day.  You  have  maintained  the  jjublished  tariffs  on  all  the  traffic 
of  that  character  you  have  carried? 

Mr.  Collister.  Yes,  sir. 

Mr.  Day.  How  about  dressed  beef? 

Mr.  Collister.  The  same  thing  applies. 

Mr.  Day.  You  charged  the  published  tariff  rates  and  have  adhered 
to  them? 

Mr.  Collister.  Yes,  sir. 

Mr.  Day.  There  have  been  no  rebates? 

Mr.  Collister.  Not  at  all. 

Mr.  Day.  Have  you  participated  in  any  export  tariff  on  beef? 

Mr.  Cqllister,  Not  on  beef. 

Mr.  Day.  You  carried  in  the  last  four,  five,  or  six  months  no  exports? 

Mr.  Collister.  No  export  provisions. 

Commissioner  Prouty.  Why  is  that?  Is  there  being  any  of  that 
stuff"  exported  from  Kansas  City  at  the  present  time? 

Mr.  Collister.  I  think  there  is. 

Commissioner  Prouty.  Do  you  know  by  what  lines  it  moves? 

Mr.  Collister.  Well,  I  have  an  idea.  Of  course,  we  learn  from 
time  to  time  approximately  what  the  movement  is,  and  what  lines  handle 
the  business,  but  I  can  not  tell  offhand  now  what  lines  they  are. 

Commissioner  Prouty.  How  many  cars  are  sent  out  a  week  on  the 
average,  for  export? 

Mr.  COLUSTEK.  Well,  I  would  approximate  it  at  100  cars. 


272  APPENDIX   G. 

Commissioner  Fiier.  For  export,  you  mean! 

Mr.  (JOLLISTBR.  Yes,  sir. 

Mr.  Day.  You  do  carry  domestic  packinghouse  products'? 

Mr.  CoLLisTER.  Oh,  yes;  our  terminal  advantages,  etc.,  attract  very 
much  of  that  tiaffic. 

Mr.  Day.  I  think  that  is  all,  your  honors,  that  I  wish  to  ask  Mr. 
Collister. 

Commissioner  Clements.  How  long  have  you  been  in  the  business? 

Mr.  Collister.  Two  years  with  this  company. 

Commissioner  Clements.  Have  you  ever  seen  anything  that  indi- 
cated that  the  established  rates,  the  published  rates,  were  being 
departed  from  ? 

Mr.  Collister.  Yes,  sir. 

Commissioner  Clements.  During  what  period? 

Mr.  Collister.    Do  you  refer  now  to  export  or  domestic? 

Commissioner  Clements.  Well,  either.  I  believe  there  has  been  no 
published  rate  on  exi)ort.    That  is  your  idea,  is  it? 

Mr.  Collister.  My  idea. 

Commissioner  Clements.  Then,  the  only  published  rate  is  the  domes- 
tic. Now,  during  the  time  you  have  been  here  at  what  period  and  dur- 
ing what  period  have  you  seen  evidence  of  a  de])arture  from  the  rate, 
cutting  of  the  rate,  rebates,  or  anything  of  that  character? 

Mr.  Collister.  You  mean  on  packing-house  products? 

Commissioner  Clements.  Packing-house  products  and  dressed  beef, 
or  either. 

Mr.  Collister.  Well,  it  would  be  rather  hard  to  answer  that.  We 
have  felt  at  times  tliat  the  rates  have  been  manipulated,  but  we  have 
no  absolute  positive  knowledge  of  it. 

Commissioner  Clements.  That  is  the  reason  I  do  not  ask  as  to  par- 
ticular instances,  because  it  seems  impossible  to  get  those,  and  we  can 
see  how  difficult  it  is  for  a  competitor  to  get  at  those  details,  but  we 
are  often  told  by  those  who  are  unable  to  give  specific  details  of  trans- 
actions themselves  that  they  see  the  outcroppings  and  evidences  which 
satisfy  them  to  a  moral  certainty  that  something  of  that  kind  is  being 
done.     Have  you  seen  any  of  those  signs? 

Mr.  Collister.  I  think  I  have;  that  is,  I  felt  that  I  have. 

Commissioner  Clements.  How  is  it  now? 

Mr.  Collister.  It  is  all  right,  I  think.  I  am  almost  certain  that 
the  tariff  rate  is  being  maintained  at  the  present  time. 

Commissioner  Clements.  That  is  your  belief  about  it  from  all  the 
circumstances  and  things  that  you  see? 

Mr.  Collister.  Yes,  sir. 

Commissioner  Clements.  How  far  now  do  you  go  back  with  that 
statement? 

Mr.  Collister.  Well,  I  do  not  know. 

Commissioner  Clements.  A  week? 

Mr.  Collister.  Yes,  sir;  you  could  go  back  a  week  sure. 

Commissioner  Clements.  A  month? 

Mr.  Collister.  Yes,  sir;  I  think  you  could  go  back  to  the  first  of 
the  year — back  to  the  first  of  the  year. 

Commissioner  Clements.  How  about  the  latter  part  of  last  year? 

Mr.  Collister.  I  am  not  so  sure  about  that. 

Commissioner  Prouty.  You  generally  begin  over  again  the  first  of 
every  year? 

Mr.  Collister.  I  think  that  is  the  general  plan. 

Commissioner  Clements.  Can  you  give  us  some  idea — this  is  a  gen- 


APPENDIX   G.  273 

eral  inquiry  for  information — can  you  tell  us  what  it  is  that  has  made 
these  impressions  on  you?  When  the  rates  were  disorganized  and 
demoralized,  what  made  you  think  so;  what  did  you  see  that  made 
you  think  so? 

Mr.  OoLLiSTER.  Principally  gossip. 

Commissioner  Clements.  Well,  there  is  gossip  now,  is  there  not — 
what  we  would  call  gossip  or  a  report  of  cut  rates? 

Mr.  CoLLisTER.  Yes,  sir;  I  do  uot  think  there  is  any  just  now  on 
domestic  traflSc. 

Commissioner  Clements.  There  are  charges  of  that  sort,  are  there 
not? 

Mr.  CoLLiSTER.  I  do  not  believe  so.  1  think  that  in  making  these 
reports  domestic  and  export  business  is  confounded.  A  man  says  the 
export  packing-house  products  rate  is  cut,  say  G  cents  a  100  pounds, 
and  it  is  assumed  that  the  domestic  rate  is  also  manipulated  to  the 
extent  of  the  inland  proportion  of  the  export  rate. 

Commissioner  Clements.  Is  there  any  difficulty  in  the  way  of  par- 
ties billing  it  as  export  and  shipping  it  for  export  and  then  using  it  for 
domestic  purposes  ? 

Mr.  CoLLiSTER.  There  certainly  is,  ye?,  sir.  There  is  a  difficulty. 
They  can  not  do  it  for  the  reason  that  the  product  is  billed  out  for 
export  It  shows  a  foreign  destination.  It  shows  a  steamship  line  to 
which  it  is  consigned.  The  export  papers  are  made  up,  and  export 
bill  of  lading  issued  and  export  manifests  are  made  out.  They  are  sent 
to  the  foreign  freight  agent  at  the  seaboard  and  an  agent  is  advised 
when  that  traffic  clears  at  the  seaboard  and  he  knows  to  what  steam- 
ship line  it  is  delivered  and  he  absolutely  knows  that  it  went  for 
export. 

Commissioner  Clements.  Well,  if  he  wanted  to  carry  domestic  freight 
and  the  road  wanted  to  carry  it  and  cooperated,  it  could  be  diverted 
there  and  delivered  for  domestic  use,  could  it  not? 

Mr.  COLLISTER.  There  are  so  many  roads  in  interest  that  I  doubt 
very  much  whether  they  would  stand  for  any  connivance  of  that  sort. 

Commissioner  Clements.  You  thiuk  your  competitors 

Mr,  COLLISTER.  No;  I  mean  the  roads  in  interest. 

Commissioner  Clements.  You  mean  the  lines  that  make  up  the 
through  line? 

Mr.  COLLISTER.  The  lines  that  make  up  the  through  line. 

Commissioner  Clements.  Well,  these  lines  that  do  make  up  the 
through  line  from  time  to  time  drop  into  the  habit  of  paying  rebates, 
do  they  not? 

Mr.  COLLISTER.  I  believe  they  do.    They  have  in  the  past. 

Commissioner  Clements.  Well,  would  not  they  just  as  soon  evade 
the  rate  by  this  other  means  as  to  pay  a  rebate? 

Mr.  COLLISTER.  I  do  not  think  so. 

Commissioner  Clements.  Why? 

Mr.  COLLISTER.  Well,  it  would  be  very  hard  to  cover  up  in  the  first 
place. 

Commissioner  Clements.  So  that  it  is  your  belief  that  foreign  ship- 
ments are  not  treated  that  way? 

Mr.  COLLISTER.  I  think  that  all  the  stuff  billed  showing  a  foreign 
destination,  all  export  traffic  that  goes  forward  from  here  showing  a 
foreign  destination,  ultimately  goes  to  that  destination  if  the  export 
papers  are  made  out. 

Commissioner  Clements.  Well,  are  they  made  out  in  all  cases? 

Mr.  COLLISTER.  So  far  as  I  know;  yes,  sir. 
74lA— 05 18 


274  APPENDIX  a. 

Commissioner  Clements.  So  far  as  you  believe  where  you  have  no 
knowledge'? 

Mr.  CoLLiSTER.  I  have  no  knowledge  to  the  contrary. 

Commissioner  Clements.  I  will  ask  this  question:  Is  there  any 
arrangement,  understanding,  or  practice  whereby  outgoing  freight 
from  Kansas  City  of  this  kind  is  apportioned  between  the  different 
roads  or  lines? 

Mr.  CoLLiSTEB.  You  mean  by  agreements'? 

Commissioner  Clements.  By  agreement,  understanding,  practice,  or 
any  other  way. 

Mr.  CoLLisTER.  Why,  it  is  all  apportioned. 

Commissioner  Clements.  How? 

Mr.  CoLLiSTER.  By  reason  of  solicitation. 

Commissioner  Clements.  Is  there  any  jiractice,  by  agreement  or 
otherwise,  whereby  it  is  understood  or  worked  out  that  this  line  shall 
have  a  certain  proportion  of  the  business,  and  so  on,  or  do  you  get  a 
certain  proportion  of  the  business? 

Mr.  Collister.  Well,  not  that  I  know  of     No. 

Commissioner  Clements.  Do  you  have  any  reason  to  believe  there 
is  such? 

Mr.  Collister.  I  have  not. 

Commissioner  Clements.  How  long  have  the  rates  been  the  same 
as  they  are  now? 

Mr.  Collister.  The  published  rates  on  domestic  business? 

Commissioner  Clements.  Yes,  sir. 

Mr.  Collister.  Well,  they  have  been  that  way  for  years,  with  some 
few  changes  that  were  brought  about  by  competition.  The  basis  has 
been  30  cents  from  Chicago  to  New  York  for  ])ossibly  fifteen  years,  with 
the  exception  of  times  when  a  less  basis  would  be  necessary  by  reason 
of  competition  and  a  tariff  issued,  and  subsequently  they  would  come 
back  to  this  same  basis  again.  The  recognized  basis  on  packing-house 
products  for  years  has  been  the  fifth-class  rate,  which  is  30  cents  from 
Chicago  to  New  York. 

Commissioner  Clements.  But  there  is  nothing  in  practice  or  agree 
ment  or  otherwise  that  interferes  with  every  single  road  here  soliciting, 
securing,  and  carrying  all  the  traffic  it  can  get  from  any  of  these  shippers 
and  retaining  without  accounting  to  any  of  the  others  for  any  portion 
of  it? 

Mr.  Collister.  Not  a  thing  I  know  of. 

Commissioner  Clements.  You  have  no  reason  to  believe  there  is  such 
a  thing? 

Mr.  Collister.  No  reason. 

Commissioner  Clements.  Do  not  some  of  these  tarifi's  have  on  them 
a  statement  that  the  rates  therein  imblished  apply  on  domestic  as  well 
as  on  export? 

Mr.  Collister.  Well,  I  am  not  sure  about  that,  but  I  do  not  believe 
they  show  that. 

Commissioner  Clements.  Or  maybe  it  is  put  the  other  way — on  for- 
eign as  well  as  domestic. 

Mr.  Collister.  I  was  not  evading  the  question. 

Commissioner  Clements.  I  did  not  mean  that  you  were.  I  was  not 
sure  which  way  it  was  stated. 

Mr.  Collister.  I  have  seen  tariffs — I  do  not  remember  whether  they 
were  provision  tariffs  or  not — that  would  make  a  statement  that  these 
rates  will  apply  as  the  proportion  of  the  through  rate  on  export  as  well 
as  domestic  business,  or  there  has  been  a  specific  tariff  issued  which 


APPENDIX    G.  275 

sliows  that  this  tarift'will  apply  ouly  on  export  business  as  a  proportion 
of  the  through  rate. 

Commissioner  Prouty.  Your  present  understanding  is  that  you  have 
a  right  to  make  any  rate  on  export  business  irrespective  of  the  pub- 
lished tariff;  that  you  are  under  no  obligation  to  adhere  to  any  pub- 
lished tarift? 

Mr.  CoLLiSTER.  No;  I  do  not  understand  that.  I  am  governed  very 
largely  by  the  desire  or  wish  of  my  superior  officers. 

Commissioner  Prouty.  Your  instructions,  then,  from  your  superior 
officers  are,  that  on  export  business  you  may  make  a  rate  without  ref- 
erence to  the  published  tariff? 

Mr.  CoLLiSTER.  No,  sir;  they  might  instruct  me  to  the  effect  that  on 
export  business  they  will  accept  down  to  a  certain  minimum. 

Commissioner  Prouty.  In  point  of  fact,  you  do  not  regard  the  pub- 
lished tariff*  in  making  an  exijort  rate? 

Mr.  COLLISTER.  No,  sir. 

Commissioner  Prouty.  How  long  is  it  since  you  have  gone  on  that 
theory  ? 

Mr.  COLLISTER.  Well,  since  the  1st  of  January,  although  I  have  car- 
ried no  business. 

Commissioner  Prouty.  Previous  to  the  1st  of  January  your  instruc- 
tions were  to  charge  the  domestic  rate  as  your  part  of  the  through 
export  rate,  were  they? 

Mr.  COLLISTER.  Not  at  all  times. 

Commissioner  Prouty.  That  is  all. 

Commissioner  Fifer.  It  has  been  stated  here  by  some  witnesses  that 
a  regular,  even  rate  could  be  maintained  on  export  goods.  What  is 
your  view  about  that? 

Mr.  COLLISTER.  I  do  not  believe  it  can  be  unless  you  get  the  basis 
down  very  low.  On  packing-house  products,  for  instance,  the  rate 
from  Kansas  City  to  Gulf  ports  is  27  cents  per  hundred  pounds.  Now, 
competition  would  compel  a  lower  rate  than  o3.^  cents  from  Kansas 
City  to  New  York  if  the  product  was  forwarded  through  that  port. 

Commissioner  Prouty.  Well,  suppose  it  did.  The  question  is  why 
not  publish  a  lower  export  rate. 

Mr.  COLLISTER.  I  believe  when  you  do  that  it  will  result  in  very 
serious  manii)ulations.  I  believe  if  a  published  rate  was  put  into  effect 
of  27  cents  to  New  York  tbe  product  could  be  billed  to  New  York  for 
export  at  27  cents,  and  be  then  and  there  diverted  for  domestic 
purposes. 

Commissioner  Fifer.  Is  there  any  common  understanding  between 
the  railroads  reaching  tide  water  as  to  what  this  rate  shall  be  for  export 
goods! 

Mr.  Oollister.  At  the  present  time;  yes,  sir. 

Commissioner  Clements.  Did  you  not  give  some  forcible  reasons 
why  they  could  not  be  shipped  out  for  foreign  and  diverted  to  domestic 
use  ? 

Mr.  COLLISTER.  I  qualified  by  saying  when  a  through  export  bill 
of  lading  had  been  issued.  They  can  not  deixjat  that  now  because  we 
nq,me  a  through  rate. 

Commissioner  Clements.  Suppose  the  rates  were  published,  what 
would  be  the  difference  between  the  situation  then  and  now?  It  would 
make  it  easy  to  divert  for  domestic  purposes  under  the  changed  condi- 
tions and  impossible  now? 

Mr.  COLLISTER.  If  you  had  a  tariff  issued  to  New  York,  for  instance, 
tor  export,  so  reading,  I  do  not  believe  you  could  decline  to  accept  a 


276  APPENDIX   O.      - 

man'3  product  if  it  was  billed  to  New  York  for  export  and  he  would  say 
I  have  my  own  ocean  engagement  and  my  agent  at  New  York  will  take 
charge  of  this  jjroduct  and  bill  it  for  export. 

Commissioner  Fifer.  That  would  terminate  his  contract? 

Mr.  CoLLiSTER.  I  think  so. 

Commissioner  Clements.  Why  could  not  that  be  done  nowt 

Mr.  CoLLiSTER.  For  the  reason  that  we  name  the  through  rate  to 
Liverpool  or  foreign  destination,  whatever  it  may  be. 

Commissioner  Clements.  Do  you  know  that  all  roads  do  that  on  all 
shipments? 

Mr.  COLLISTER.  I  believe  so.  They  may  not  name  a  through  rate, 
but  the  i)acker  furnishes  them  with  an  ocean  contract  and  they  make 
complete  ocean  papers. 

Commissioner  Clements.  There  is  not  any  fact  I  can  see,  however, 
why  it  should  not  be  just  as  easy  now  to  do  that  as  it  would  be  in  case 
of  publishing  the  rates,  as  suggested  a  moment  ago,  if  they  were  dis- 
posed to  do  it. 

Mr.  COLLISTER.  Well,  I  just  expressed  my  own  views  on  the  subject. 

Commissioner  Clements.  Do  I  understand  you  to  say  that  it  would 
be  any  more  difficult  in  the  one  case  than  in  the  other  if  they  were 
inclined  to  do  it? 

Mr.  COLLISTER.  I  think  so.  I  believe  if  you  had  a  published  tariff 
in  effect  in  New  York  on  business  for  export  that  it  would  by  some 
means  be  applied  on  domestic  business. 

Commissioner  Clements.  I  still  can  not  see  why  that  can  not  be  done 
now  just  as  easily  as  if  you  had  that  rate. 

Mr.  COLLISTER.  You  would  not  publish  a  through  rate  to  Liverpool. 
If  you  came  to  an  agreement  to  make  a  less  rate  to  tide  water  on  export 
business  than  on  domestic  business  you  would  not  publish  a  through 
rate  to  Liverpool  or  destination,  because  the  ocean  rates  change  from 
time  to  time.  You  would  publish  it  to  tide  water,  and  your  tariff  would 
read  "New  York,  for  export,"  and  a  man  would  hand  you  a  lot  of  freight 
billed  to  New  York  for  export.  I  do  not  believe  that  under  the  law  you 
could  decline  to  accept  it  under  the  tariff  you  have  in  effect. 

Commissioner  Clements.  You  do  not  think  any  business  is  handled 
that  way  now  shipped  to  New  York  for  export  ? 

Mr.  COLLISTER.  I  do  not  know  of  any  that  is  not  actual  export 
business. 

Commissioner  Fifer.  And  a  through  contract  for  the  foreign  desti- 
nation ? 

Mr.  COLLISTER.  Yes,  sir;  all  the  business  I  have  handled  has  been 
of  that  class. 

Mr.  Day.  1  neglected  to  ask  you — I  do  not  recall  that  I  asked  you — 
if  you  had  received  any  authorization  to  apply  this  29-cent  rate  on 
export  traffic  east  of  the  river? 

Mr.  COLLISTER.  Yes,  sir;  I  received  it. 

Mr.  Day.  From  whom  did  you  get  that? 

Mr.  COLLISTER.  Well,  it  came  to  me  in  a  regular  file  of  tiariffs  that 
come  in  from  time  to  time — just  a  notice  that  the  basis  on  export  pro- 
visions, the  minimum  basis,  would  be  29  cents  from  the  Mississippi 
River  and  25  cents  from  Chicago  to  New  York. 

Mr.  Day.  Was  it  signed  by  anybody  ? 

Mr.  COLLISTER.  No,  sir. 

Mr.  Day.  Where  did  it  come  from? 

Mr.  COLLISTER.  I  believe  it  came  from  Chicago. 

Mr.  Day.  From  Mr.  Tucker? 


APPENDIX  a.  277 

Mr.  CoLLiSTER.  I  would  not  say.  I  am  not  certain  that  it  came  from 
Mr.  1'iicker. 

Mr.  Day.  Well,  what  is  your  belief? 

Mr.  CoLLiSTER.  Well,  I  believe  it  is  an  agreed  rate  in  Chicago. 

Mr.  Day.  Do  you  think  it  came  from  Mr.  Tucker? 

Mr.  COLLISTER.  I  do  not  know  that. 

Mr.  Day.  What  do  you  thiuk?     What  is  your  belief? 

Mr.  COLLISTER.  Well,  1  do  not  know  whether  I  care  to  express  a 
belief. 

Mr.  Day.  Did  you  assume  that  it  came  from  him? 

Mr.  COLLISTER.  Not  direct  to  me. 

Mr.  Day.  But  you  assumed  it  originated  there.     How  was  it  dated? 

Mr.  COLLISTER.  I  do  not  remember  the  date. 

Mr.  Day.  You  have  it? 

Mr.  COLLISTER.  I  think  I  have. 

Mr.  Day.  That  is  all. 

There  being  no  further  questions,  the  witness  was  excused. 

T.  J.  Barnard,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  lines  do  you  represent? 

Mr.  Barnard.  The  Cumberland  Gap  Despatch. 

Mr.  Day.  Over  what  railroads  does  the  Cumberland  Gap  Despatch 
operate? 

Mr.  Barnard.  The  Louisville  and  Nashville,  the  Louisville,  Hender- 
son and  St.  Louis,  and  the  Norfolk  and  Western. 

Mr.  Day.  How  long  have  you  been  acting  as  agent  of  that  line  here? 

Mr.  Barnard.  Two  years. 

Mr.  Day.  During  the  past  six  mouths  have  packinghouse  products 
gone  to  your  line? 

Mr.  Barnard.  No,  sir. 

Mr.  Day.  Either  domestic  or  export? 

Mr.  Barnard.  No,  sir. 

Mr.  Day.  Or  dressed  beef? 

Mr.  Barnard.  No,  sir. 

Mr.  Day.  Have  you  sought  the  business? 

Mr.  Barnard.  No,  sir. 

Mr.  Day.  What  traffic  are  you  engaged  in? 

Mr.  Barnard.  Export  flour  and  grain. 

Mr.  Day.  You  have  not  participated  at  all  in  the  transportation  of 
packing-house  products  or  dressed  beef? 

Mr.  Barnard.  Not  domestic;  no,  sir. 

Mr.  Day.  Or  export? 

Mr.  Barnard.  We  have  had  no  export. 
.   Mr.  Day.  Have  you  a  rate  on  export? 

Mr.  Barnard.  No,  sir. 

Mr.  Day.  Did  you  have  this  advice  that  you  might  make  a  rate  of  29 
cents  east  of  the  river  and  25  cents  east  of  Chicago  on  packing  house 
products  ? 

Mr.  Barnard.  No,  sir ;  ve  never  quoted  those  rates  east  to  the  sea- 
board. Ours  is  a  rail  and  water  line  from  Norfolk. 

Mr.  Day.  A  rail  line  to  Norfolk? 

Mr.  Barnard.  Yes,  sir. 

Mr.  Day.  You  are  not  in  that  packing-house  product  business  at  all? 

Mr.  Barnard.  No,  sir. 

Mr.  Day.  I  think  that  is  all  I  care  to  ask. 

Commissoner  Prouty.  Have  you  solicited  that  business  at  all  ? 


278  APPENDIX    G. 

Mr.  Barnard.  Well,  we  are  not  prepared  to  handle  it.    Our  line  ia 
a  rail  and  water  line,  and  we  can  not  solicit  tUat  traffic  for  domestic 

use. 
There  being  no  further  questions,  the  witness  was  excused. 

S.  D.  McAllister,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  line  are  you  agent  for  here? 

Mr.  McAllister.  The  American  Refrigerator  Transit  Company. 

Mr.  Day.  What  roads  does  that  operate  over? 

Mr.  McAllister.  Any  road. 

Mr.  Day.  Who  owns  it— is  it  a  corporation? 

Mr.  McAllister.  Yes,  sir. 

Mr  Day.  What  road  does  it  act  in  conjunction  with  or  is  it  gov- 
erned by? 

Mr.  McAllister.  By  the  Missouri  Pacific,  the  Iron  Mountain,  and 
the  Wabash. 

Mr.  Day.  Have  you    been  in  the  transportation  of  packing-house 
products  for  the  past  three  months'? 

Mr.  McAllister.  They  load  some  of  our  cars. 

Mr.  Day.  They  use  your  cars? 

Mr.  McAllister.  Yes,  sir. 

Mr.  Day.  Have  you  had  anything  to  do  with  the  quoting  of  a  rate? 

Mr.  McAllister.  I  do  not  quote  rates  on  it,  and  do  not  solicit  the 
business  in  any  way. 

Mr.  Day.  Your  duties  are  in  conjunction  with  the  refrigerator  cars, 
are  they? 

Mr.  McAllister.  Yes,  sir. 

Mr.  Day.  ^our  duties  are  in  connection  with  the  cars  themselves  and 
not  the  commodities  transported  in  the  cars? 

Mr.  McAllister.  We  solicit  some  classes  of  business,  but  not  pack- 
ing-house i)roducts. 

Mr.  Day.  Dressed  beef? 

Mr.  McAllister.  No,  sir. 

Mr.  Day.  What  class  of  business  do  you  solicit? 

Mr.  McAllister.  Produce,  vegetables— any  perishable  freight. 

Mr.  Day.  You  have  not  carried  any  packing-house  products  at  all? 

Mr.  McAllister.  They  are  loaded  in  our  cars;  yes,  sir. 

Mr.  Day.  But  you  made  no  rate  and  quoted  no  rate? 

Mr.  McAllister.  No,  sir.  / 

Mr.  Day.  Have  you  had  anything  to  do  with  collecting  any  of  the 
rates  charged  or  refunding? 

Mr.  McAllister.  No,  sir. 

Mr.  Day.  Has  any  passed  through  your  hands? 

Mr.  McAllister.  No,  sir. 

Mr.  Day.  Or  any  accounts  regarding  it? 

Mr.  McAllister.  No,  sir. 

Mr.  Day.  What  do  you  do — rent  your  cars  to  the  roads? 

Mr.  McAllister.  Our  cars  are  owned  by  the  roads  mentioned. 

Mr.  Day.  You  look  after  the  mileage? 

Mr.  McAllister.  Our  car  accountant  does;  yes,  sir. 

Mr.  Day.  What  is  the  scope  of  your  duty  in  connection  with  the  car 
company? 

Mr.  McAllister.  I  do  everything  to  further  their  interest  in  this 
territory,  to  promote  prompt  loading  of  my  cars. 

Mr.  Day.  You  have  authority  from  the  Missouri  Pacific  or  the  roads 


APPENDIX   G.  279 

that  control  this  line  to  name  rates  on  other  things  than  packing-house 
j)roduct8  and  dressed  beef? 

Mr.  McAllister.  No,  sir. 

Mr.  Day.  Or  anything? 

Mr.  McAllister.  ISTo,  sir. 

Mr.  Day.  Do  you  quote  rates  on  anything? 

Mr.  McAllister.  I  do  as  a  matter  of  information  only. 

Mr.  Day.  What  do  you  mean  by  that? 

Mr.  McAllister.  When  a  shipper  wants  to  know  what  the  rate  is 
between  one  point  and  another  I  look  it  up  for  him  and  let  him  know, 
but  I  do  not  guarantee  that  rate  or  anything  of  that  kind. 

Mr.  Day.  But  you  do  nothing  in  regard  to  packing-house  products? 

Mr.  McAllister.  No,  sir. 

Mr.  Day.  That  is  all. 

The  witness  was  excused. 

W.  B.  Everest,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  line  are  you  agent  for? 

Mr.  Everest.  1  am  agent  for  the  Great  Eastern  Line. 

Mr.  Day.  Over  what  roads  does  your  line  operate? 

Mr.  Everest.  The  Grand  Trunk  and  its  connections  east,  the  Lack- 
awanna roads  to  Buffalo,  the  Boston  and  Maine  and  eastern  connections. 

Mr.  Day.  Has  your  line  carried  any  packing-house  products  in  the 
last  six  months? 

Mr.  Everest.  I  have  not  seen  any. 

Mr.  Day.  Have  you  known  of  any? 

Mr.  Everest.  None  billed  by  the  Great  Eastern  Line.  There  might 
be  a  stray  car  or  two.  We  take  it  when  we  can  get  it,  but  I  have  not 
solicited  it  for  a  year  or  more. 

Mr.  Day.  Do  yoR  speak  now  of  domestic  or  export,  or  both  ? 

Mr.  Everest.  Both. 

Mr.  Day.  You  have  not  carried  either  except  a  stray  car? 

Mr.  Everest.  Excepting  as  it  comes  along  to  us.  I  think  I  have 
not  had  any  export  since  October. 

Mr.  Day.  The  domestic  traffic  that  has  come  to  your  line  during  the 
six  months,  what  rate  has  been  charged  and  collected  on  it? 

Mr.  Everest.  I  do  not  know.  Nothing  but  tariff  I  am  sure.  I  do 
not  pay  mucli  attention  to  the  packinghouse  products  at  all.  I  work 
chiefly  west  bound.     We  do  not  refuse  it,  understand. 

Mr.  Day.  When  it  does  come  to  you,  you  say  it  has  paid  the  tariff 
rate? 

Mr.  Everest.  Yes,  sir. 

Mr.  Day.  The  tariff  rate  has  been  collected  and  retained? 

Mr.  Everest.  So  far  as  I  know. 

Mr.  Day.  How  about  export  coming  to  you? 

Mr.  Everest.  Just  the  same. 

Mr.  Day.  What  rate  has  been  charged  on  that? 

Mr,  Everest.  The  full  tariff. 

Mr.  Day.  No  concession  for  the  export  rate? 

Mr.  Everest.  No,  sir ;  we  have  no  authority. 

Mr.  Day.  The  export  traffic  that  has  gone  your  way  has  paid  the 
published  tariff? 

Mr.  Everest.  The  published  tariff'  inland  to  the  seaboard  plus  the 
ocean. 

Mr.  Day.  You  mean  to  say  that  the  export  traffic  that  has  gone  your 
way  has  paid  the  rate  the  domestic  traffic  bears  to  the  seaboard! 


280  APPENDIX  a. 

Mr.  Everest.  Certainly ;  the  published  tariff  rate  to  the  seaboard. 

Mr.  Day.  Did  you  receive  this  notice  about  a  29-ceut  rate  east  of  the 
river  on  export? 

Mr.  Everest.  I  have  never  heard  of  it  until  it  came  out  in  evidence 
here  this  morning. 

Mr.  Day.  That  is  all,  your  honors. 

There  being  no  further  questions,  the  witness  was  excused. 

J.  E.  Gavin,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  line  are  you  agent  for? 

Mr.  Gavin.  The  Vandalia  Railroad. 

Mr.  Day.  How  long  have  you  been  its  agent  here? 

Mr.  Gavin.  About  fifteen  years. 

Mr.  Day.  Agent  for  the  railroad  or  the  line? 

Mr.  Gavin.  For  the  railroad. 

Mr.  Day.  Have  you  been  in  the  packing-house  products  transporta- 
tion? 

Mr.  Gavin.  I  have  not  solicited  any  for  a  year  and  a  half.  I  devote 
my  time  to  west  bound  business. 

Mr.  Day.  Have  you  contracted  for  any  ? 

Mr.  Gavin.  No,  sir. 

Mr.  Day.  Neither  domestic  nor  export? 

Mr.  Gavin.  No,  sir. 

Mr.  Day.  You  do  not  represent  any  fast  freight  line? 

Mr.  Gavin.  No,  sir. 

Mr.  Day.  Simply  the  Vandalia  road? 

Mr.  Gavin.  Yes,  sir. 

Mr.  Day.  Have  you  had  any  authorization  to  solicit  for  packing- 
house products  or  dressed  beef  f 

Mr.  Gavin.  No,  sir. 

Mr.  Day.  Nor  have  you  contracted  to  transport  any? 

Mr.  Gavin.  None  at  all. 

Mr.  Day.  Had  you  received  a  copy  or  notice  of  this  29-cent  rate  east 
of  the  river? 

Mr.  Gavin.  Yes,  sir. 

Mr.  Day.  And  25  cents  from  Chicago? 

Mr.  Gavin.  I  do  not  know — 29  cents  from  the  river. 

Mr.  Day.  Your  line  does  not  i^articipate  from  Chicago? 

Mr.  Gavin.  No,  sir;  only  by  St.  Louis  and  Peoria. 

Mr.  Day.  What  rate  applied  by  Peoria? 

Mr.  Gavin.  I  do  not  know.    I  did  not  quote  the  rate. 

Mr.  Day.  Who  did  you  get  the  authorization  from? 

Mr.  Gavin.  I  think  it  came  from  Chicago. 

Mr.  Day.  From  where  in  Chicago? 

Mr.  Gavin.  I  do  not  know. 

Mr.  Day.  Who  did  it  come  from? 

Mr.  Gavin.  The  general  oflHce. 

Mr.  Day.  Of  the  Vandalia  line  or  the  PennsylvaniaT 

Mr.  Gavin.  The  Vandalia  road. 

Mr.  Day.  It  came  from  the  man  in  your  office? 

Mr.  Gavin.  That  makes  the  tariffs,  I  suppose. 

Mr.  Day.  Do  you  know  who  he  is? 

Mr.  Gavin.  No,  sir. 

Mr.  Day.  It  was  not  accompanied  by  any  letter  of  advice  t 

Mr.  Gavin.  No,  sir;  it  was  just  a  little  memorandum. 

Mr.  Day.  When  did  you  get  it? 


APPENDIX   Q.  281 

Mr.  Gavin.  I  tliink  it  was  February  25tli  or  24th.  I  did  uot  quote 
the  rate. 

Mr.  Day.  Was  it  dated! 

Mr.  Gavin.  I  believe  it  was. 

Mr.  Day.  What  date? 

Mr.  Gavin.  The  24th  or  25th  of  February. 

Mr.  Day.  What  did  it  contain — what  did  it  state? 

Mr.  Gavin.  Export  something,  I  do  uot  remember — export  rate  29 
cents;  export  from  the  Mississippi  River  29  cents.  I  knew  at  the  time 
27^  cents. 

Mr.  Day.  Who  named  27|^  cents? 

Mr.  Gavin.  Heard  it  mentioned  this  morning  by  Mr.  Marshall  and  I 
think  the  daily  papers  were  stating  what  the  packers  were  doing  the 
last  two  or  three  months. 

Mr.  Day.  Is  that  your  only  source? 

Mr.  Gavin.  My  only  source. 

Mr.  Day.  Is  that  by  way  of  the  Mississippi  River  or  the  Gulf  ports? 

Mr.  Gavin.  I  presume  from  the  Mississippi  River  to  New  York  on  a 
basis  of  27^  cents  to  New  York. 

Mr.  Day.  And  you  have  not  had  any  packing-house  products  or 
dressed  beef? 

Mr.  Gavin.  No,  sir. 

Mr.  Day.  Have  you  solicited  them? 

Mr.  Gavin.  No,  sir. 

Mr.  Day.  That  is  all. 

Commissioner  Prouty.  Who  solicits  that  line  for  your  road  to  the 
Mississippi? 

Mr.  Gavin.  Nobody.  Our  road  is  a  short  road  to  Indianapolis.  I 
devote  my  time  to  Central  States  business. 

Commissioner  Prouty.  Your  road  is  just  as  long  from  the  west  to 
the  east  as  from  the  east  to  the  west? 

Mr.  Gavin.  Then  we  let  the  Pennsylvania  solicit  the  business.  We 
are  a  part  of  the  Pennsylvania  or  will  be,  I  guess. 

Commissioner  Clements.  What  was  the  published  rate  from  Kan- 
sas City  to  the  Mississippi  River  when  this  27^ -cent  rate  was  in? 

Mr.  Gavin.  I  think  18J  cents. 

Commissioner  Clements.  You  do  not  know  actually  of  its  being  in? 

Mr.  Gavin.  No,  sir;  I  do  not. 

Commissioner  Clements.  Is  this  business  an  undesirable  kind  of 
freight  for  the  railroads — dressed  beef  and  packing  house  products? 

Mr.  Gavin.  I  do  not  know. 

Commissioner  Clements.  There  does  not  seem  to  be  anybody  hardly 
that  solicits  it.     It  just  finds  its  way  out  somehow. 

Mr.  Gavin.  That  may  be. 

Commissioner  Clements.  Is  it  because  the  rate  is  cut  that  makes  it 
undesirable  for  a  road  that  wants  to  adhere  to  the  rate? 

Mr.  Gavin.  I  do  not  know. 

Commissioner  Clements.  You  have  been  in  the  business  here  how 
long? 

Mr.  Gavin.  Fifteen  years. 

Commissioner  Clements.  You  know  pretty  well  when  rates  are 
demoralized  ? 

Mr.  Gavin.  I  guess  I  do. 

Commissioner  Clements.  I  do  not  mean  with  absolute  certainty. 

Mr.  Gavin.  No,  but  two  and  two  generally  make  four. 

Commissioner  Clements.  Now,  with  your  experience,  and  observa- 


282  APPENDIX   G. 

tion,  and  knowledge  of  the  situation  all  these  years,  what  is  your 
conviction  and  belief  from  the  times  and  circumstances'? 

Mr.  Gavin.  I  could  not  tell  you;  I  would  hesitate  to  say. 

Commissioner  Clements,  You  would  testify  that  you  believe  the 
rates  are  being  maintained  now? 

Mr.  (jAVIN.  No,  sir. 

Commissioner  Clements.  Is  there  any  understanding,  or  contract, 
or  agreement,  or  practice  whereby  the  east-bound  freight  is  apportioned 
among  the  several  roads  which  leave  Kansas  City? 

Mr.  Gavin.  I  do  not  know  anything  about'it,  sir.  I  have  not  been 
to  a  packing  house  for  a  year  and  three  months.  I  have  not  had  a  cut 
rate  on  anything  since  November,  1898. 

Commissioner  Clements.  Well,  you  can  tell  us  why  you  do  not  go 
to  the  packing  house. 

Mr.  Gavin.  Well,  I  presume  they  prefer  shipping  their  domestic 
freight  over  the  roads  they  ship  the  export  freight  over.  They  can 
make  trainloads  and  make  faster  time  tlian  by  dividing  it  up. 

Commissioner  Clements.  Do  you  think  the  roads  that  get  the  export 
business  get  the  domestic,  as  a  rule — the  bulk  of  it  ? 

Mr.  Gavin.  I  do  not  know  that  as  a  fact.  It  looks  but  fair  though. 
If  I  was  making  a  rate  on  export  to  a  packing  house  I  would  look  for 
the  domestic  at  the  tariff  rate. 

Commissioner  Clements.  You  would  probably  make  the  foreign  rate 
lower  than  necessary  to  get  the  domestic  rate? 

Mr.  Gavin.  That  I  do  not  know.    I  never  experimented. 

Commissioner  Clements.  It  could  be  done  where  there  is  no  fixed 
rate  for  the  foreign  business;  it  can  be  played  and  used  to  get  the  other 
business. 

Mr.  Gavin.  There  is  nothing  to  prevent  my  going  down  to  the  pack- 
ing house  and  paying  $10  apiece  for  hams  if  I  wanted  to;  if  I  did  not 
want  to  cut  a  rate,  there  is  generally  a  way  out  of  the  hole. 

Commissioner  Clements.  A  good  many  ways ;  and  it  is  your  belief 
that  a  good  many  of  these  have  been  practiced,  is  it  not? 

Mr.  Gavin.  I  do  not  know.    I  would  not  like  to  say. 

Commissioner  Clements.  I  would  not  suppose  that  you  would  know 
the  particulars,  but  does  the  situation  indicate  that? 

Mr.  Gavin.  1  do  not  know. 

Commissioner  Prouty.  If  you  bought  hams  enough  at  $10  apiece 
the  packing  house  could  give  you  the  trafitic  at  full  rates? 

Mr.  Gavin.  Yes,  sir. 

Commissioner  Prouty.  Have  you  ever  known  that  to  be  donet 

M  r.  Gavin.  No,  sir ;  but  I  say  there  are  lots  of  ways  out  of  the  woods. 

Commissioner  Prouty.  Do  you  think  the  foreign  rate  can  be  pub- 
lished to  the  seaboard  just  as  the  domestic  rate  can? 

Mr.  Gavin.  Yes,  sir. 

Commissioner  Prouty".  And  business  done  under  itt 

Mr.  Gavin.  Yes,  sir.    I  do  not  quite  understand  you. 

Commissioner  Clements.  Do  you  think  there  is  any  difficulty  in  the 
publishing  of  the  rate  on  foreign  over  domestic? 

Mr.  Gavin.  It  is  generally  specified  in  the  tariff. 

Commissioner  Clements.  The  foreign  is? 

Mr.  Gavin.  Yes,  sir ;  export  and  domestic. 

Commissioner  Clements.  Well,  the  teatimony  to-day 

Mr.  Gavin.  By  some  ports — a  great  many  go  that  way.  When  it  is 
for  New  York  it  takes  the  export  rate.  When  it  is  not  it  takes  the 
domestic,  5  cents  higher. 


APPENDIX   G.  283 

Commissioner  Clements.  The  testimony,  as  I  understood  it  to  day, 
is  that  they  pay  no  attention  to  a  tariff  on  the  export  rate. 

Mr.  Gavin.  Well,  I  may  be  wrong  on  it.  I  do  not  understand  it 
thoroughly. 

Commissioner  Clements.  They  testify,  many  of  them  do,  that  it  is 
impossible  to  do  the  business  on  a  published  rate,  the  foreign  shipments. 

Mr.  GrAViN.  Do  you  mean  that  a  representative  of  the  line  is  per- 
mitted to  make  his  own  rate  to  secure  the  business?  I  do  not  know 
anything  about  that. 

Commissioner  Clements.  Do  you  think,  as  a  traffic  man — a  railroad 
man— do  you  see  any  difficulty  in  the  way  of  transacting  this  business, 
foreign  as  well  as  domestic,  under  published  rates  which  are  adhered  to? 

Mr.  Gavin.  I  do  not,  sir.  I  have  not  given  it  any  thought  at  all.  1 
have  not  had  a  pound,  and  I  do  not  waste  my  time  and  thought  on  it. 

Commissioner  Clements.  Do  you  handle  any  foreign  shipments  of 
anything? 

Mr.  Gavin.  No,  sir. 

Commissioner  Clements.  No  kind? 

Mr.  Gavin.  No,  sir;  that  is,  I  have  not  the  last  two  or  three  years — 
say  two  years. 

Commissioner  Clements.  That  is  all. 

There  being  no  farther  questions,  the  witness  was  excused. 

J.  A.  Shannon,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  line  are  you  agent  for? 

Mr.  Shannon.  The  New  York  Despatch  and  National  Despatch 
Refrigerator  lines. 

Mr.  Day.  Over  what  roads  does  your  line  operate? 

Mr.  Shannon.  Over  the  Grand  Trunk  out  of  Chicago,  the  West 
Shore  to  New  York;  the  Grand  Trunk  and  Boston  and  Maine  and 
Central  Vermont  to  Boston. 

Mr.  Day.  How  long  have  you  been  agent  here? 

Mr.  Shannon.  For  the  last  eight  years. 

Mr.  Day.  Well,  during  the  last  six  months  have  you  carried  any 
packing-house  products? 

Mr.  Shannon.  We  do  not  carry  any  packing-house  products.  It  is 
a  purely  dairy  line. 

Mr.  Day.  Are  your  cars  refrigerator  cars? 

Mr.  Shannon.  Yes,  sir. 

Mr.  Day.  You  have  nothing  whatever  to  do  with  packing-house  prod- 
ucts ? 

Mr.  Shannon,  No,  sir. 

Mr.  Day.  Or  dressed  beef? 

Mr.  Shannon.  No,  sir. 

Mr.  Day.  That  is  all  I  wish  to  ask,  Mr.  Shannon, 

The  witness  was  excused. 

D.  H.  Keesky,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  Mr.  Kresky,  what  line  are  you  agent  for? 

Mr.  Keesky.  The  Reading  Despatch. 

Mr.  Day.  Over  what  do  you  operate — what  roads? 

Mr.  Keesky.  The  Grand  Trunk,  Lehigh  Valley,  Philadelphia  and 
Reading,  and  New  York,  New  Haven  and  Hartford. 

Mr.  Day.  How  long  have  you  been  agent  for  the  line  here? 

Mr.  Keesky.  About  eight  years. 

Mr.  Day.  Well,  I  will  ask  you  if  in  the  last  six  months  you  have 
carried  any  packing-house  products? 


284  APPENDIX    G. 

Mr.  Kresky.  I  bave  not. 

Mr.  Day.  You  have  not  transported  any! 

Mr.  Kreskv.  Well,  the  line  has. 

Mr.  Day.  I  say,  your  line. 

Mr.  Kresky.  Yes,  sir. 

Mr.  Day.  Domestic  or  exportt 

Mr.  Kresky.  Both. 

Mr.  Day.  Plow  about  dressed  beef? 

Mr.  Kresky.  Some  of  that. 

Mr.  Day.  Does  any  dressed  beef  go  for  export! 

Mr.  Kresky.  No,  sir. 

Mr.  Day.  It  is  all  for  domestic  consumption? 

Mr.  Kr]<]SKY'.  Yes,  sir. 

Mr.  Day.  Well,  the  domestic  business  you  have  transported,  I  will 
ask  you  what  rate  you  have  carried  it  at? 

Mr.  Kresky.' I  did  not  quote  the  rate. 

Mr.  Day.  You  did  not  quote  the  rate? 

Mr.  KRESKY^  No,  sir. 

Mr.  Day.  What  do  you  do — take  up  the  bills  of  lading  and  issue 
others? 

Mr.  Kresky.  There  are  none  taken  up  on  domestic. 

Mr.  Day.  Who  quotes  the  rate  on  the  traffic  you  carry! 

Mr.  Kresky.  I  do  not  know. 

Mr.  Day.  You  did  not  have  anything  to  do  with  it? 

Mr.  Kresky.  Not  a  thing. 

Mr.  Day.  Did  you  not  solicit  it? 

Mr.  Kresky.  No,  sir. 

Mr.  Day.  Did  anyone  in  your  office  quote  the  rate? 

Mr.  Kresky.  No,  sir. 

Mr.  Day.  Nobody  under  your  supervision? 

Mr.  Kresky.  No,  sir. 

Mr.  Day.  How  about  export? 

Mr.  Kresky.  The  same  way. 

Mr.  Day^  You  do  not  make  the  rate  in  either  case! 

Mr.  Kresky.  No,  sir. 

Mr.  Day.  What  is  your  function? 

Mr.  Kresky.  We  get  some  export  business,  and  what  export  we  do 
get  the  packers  simply  send  the  local  bill  of  lading  and  I  issue  the  export 
bill  of  hiding. 

Mr.  Day.  Your  office  does  simply  clerical  work? 

Mr.  Kresky.  That  is  all. 

Mr.  Day.  You  do  not  handle  any  money  or  collect  any  charges? 

Mr.  Kresky.  No,  sir. 

Mr.  Day.  And  do  not  have  ajiythiug  to  do  with  refunding  auy  por- 
tion of  it? 

Mr.  Kresky.  No,  sir. 

Mr.  Day.  You  do  not  quote  rates? 

Mr.  Kr:^ky.  No,  sir. 

Mr.  Day.  I  think  that  is  all  I  wish  to  ask. 

The  witness  was  excused. 

William  Harvey,  being  duly  sworn,  testified  as  follows; 

Mr.  Day.  What  line  are  you  agent  for,  Mr.  Harvey? 
Mr.  Harvey.  The  Empire  Line. 
Mr.  Day.  How  long  have  you  been  its  agent  heret 
Mr.  Harvey.  In  this  city  eighteen  years. 


APPENDIX    Q.  285 

Mr.  Day.  Have  any  packing-bouse  products  or  dressed  beef  gone  by 
your  line  the  last  six  months? 

Mr.  Harvey.  No,  sir. 

Mr.  Day.  None  at  all? 

Mr.  Harvey.  None. 

Mr.  Day.  You  have  not  been  in  the  business? 

Mr.  Harvey.  No,  sir. 

Mr.  Day.  What  commodities  do  you  chietiy  carry? 

Mr.  Harvey.  Grain,  general  merchandise,  and  Hour. 

Mr.  Day.  You  do  not  have  anything  to  do  with  the  soliciting  of  pack- 
ing-house products  or  dressed  beef? 

Mr.  Harvey.  We  have  at  times,  but  not  now. 

Mr.  Day.  How  long  have  you  been  out  of  it? 

Mr.  Harvey.  We  have  not  been  in  it  this  century. 

Mr.  Day.  How  about  the  last? 

Mr.  Harvey.  Last  century  we  carried  a  great  deal. 

Mr.  Day.  How  late  in  the  last  century? 

Mr.  Harvey.  Probably  up  to  the  last  of  the  year,  along  in  Decem- 
ber. 

Mr.  Day.  I  will  ask  you  in  regard  to  that  you  did  carry  in,  say,  the 
last  two  or  three  months  of  1900;  was  it  domestic  or  export? 

Mr.  Harvey.  Export. 

Mr.  Day.  No  domestic? 

Mr.  Harvey.  Very  little. 

Mr.  Day.  That  which  you  did  carry,  at  what  rate  was  it  taken? 

Mr.  Harvey.  The  tariff. 

Mr.  Day.  The  tariff  collected? 

Mr.  Harvey.  It  was  prepaid. 

Mr.  Day.  The  full  tariff'  was  prepaid? 

Mr.  Harvey.  That  is  my  understanding. 

Mr.  Day.  Who  was  it  paid  to  ? 

Mr.  Harvey.  I  presume  it  was  paid  to  the  local  agent  here.  It 
went  out  of  here  by  different  roads. 

Mr.  Day.  Have -you  any  reason  to  believe  that  any  portion  of  that 
which  was  collected  was  refunded? 

Mr.  Harvey.  No,  sir. 

Mr.  Day.  Have  you  any  reason  to  believe  that  any  concession  was 
made  on  it? 

Mr.  Harvey.  I  think  not. 

Mr.  Day.  How  about  the  export  rate  ? 

Mr.  Harvey.  The  export  was  billed  in  this  way :  It  was  billed  mostly 
to  Philadelphia,  we  will  say,  and  they  have  an  agent  there  who  makes 
their  own  contracts  for  the  ocean. 

Mr.  Day.  I  did  not  get  your  last  answer. 

Mr.  Harvey.  I  say  that  most  of  the  freight  that  went  out  of  here, 
in  fact  I  think  all  of  it  for  export,  was  billed  to  Philadelphia,  and  there 
the  packing-house  people  had  an  agent  who  made  their  own  arrange- 
ments for  the  ocean.  In  other  words,  it  was  prepaid  up  to  Philadelphia 
and  turned  over  to  the  vessel. 

Mr.  Day.  What  rate  did  it  bear  to  Philadelphia? 

Mr.  Harvey.  The  tariff. 

Mr.  Day.  The  domestic  tariff"  rate? 

Mr.  Harvey.  The  domestic  tariff' rate. 

Mr.  Day.  I  have  no  desire  to  ask  this  witness  anything  further. 

The  witness  was  excused. 


286  APPENDIX    G. 

J.  D.  Lund,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  What  is  your  relation  to  the  Wabash  road! 

Mr.  Lund.  I  represent  the  freight  department. 

Mr.  Day.  What  is  your  title. 

Mr.  Lund.  Assistant  general  freight  agent. 

Mr.  Day.  How  much  of  an  office  do  you  maintain  herel 

Mr.  Lund.  At  present  I  have  three  clerks. 

Mr.  Day.  What  is  the  general  scope  of  your  duties'? 

Mr.  Lund.  To  solicit  freight  and  quote  rates.  That  is  about  the  gen- 
eral scope. 

Mr.  Day.  Take  packing-house  products  and  dressed  beef  shipped  by 
your  road  and  charges  prepaid — to  whom  are  they  paidi 

Mr.  Lund.  Paid  to  the  local  agent  at  this  point. 

Mr.  Day.  Who  is  the  local  agent? 

Mr.  Lund.  Hugh  B.  Darneille. 

Mr.  Day.  Do  you  have  anything  to  do  with  the  collectiont 

Mr.  Lund.  I  have  uothing  to  do  with  the  collections. 

Mr.  Day.  Does  any  portion  of  it  pass  through  your  handst 

Mr.  Lund.  ISone  of  that  money  passes  through  my  hands. 

Mr.  Day.  Well,  does  any  money  pass  througli  your  hands  on  account 
of  traffic  transported  over  your  road? 

Mr.  Lund.  1  receive  moneys  for  payment  of  claims — things  like  that. 
That  has  not  a  direct  bearing  on  the  question.  But  answering  the 
question  direct,  prepaying  the  charges,  1  do  not  handle  that  now. 

Mr.  Day.  Do  you  keep  a  book  account  of  the  claims  you  pay? 

Mr.  Lund.  Yes,  sir;  they  have  a  claim  book. 

Mr.  Day.  I  mean  an  account  of  moneys  paid  on  account  of  claims,  do 
yon  keep  an  account  of  what  you  do? 

Mr.  Lund.  I  have  a  book  that  I  keep  a  record  of  claims  in. 

Mr.  Day.  Any  money  you  pay  for  claims,  do  you  keep  a  record  of  the 
money  you  pay  out  for  claims? 

Mr.  Lund.  Not  all;  no,  sir. 

Mr.  Day.  What  moneys  do  you  pay  out  which  you  do  not  keep  a 
record  of? 

Mr.  Lund.  I  have  paid  moneys  on  export  traffic  that  I  do  not  keep  a 
record  of. 

Mr.  Day.  What  else? 

Mr.  Lund.  That  is  all. 

Mr.  Day.  What  claims  do  you  pay  on  account  of  exiiort  traffic? 

Mr.  Lund.  This  business  I  have  solicited  myself. 

Mr.  Day.  Who  do  you  pay  it  to? 

Mr.  Lund.  To  the  parties  witli  whom  I  made  the  arrangements. 

Mr.  Day.  Now,  during  the  past  six  months  have  you  quoted  rates  to 
the  packers  on  domestic  traffic  to  the  Atlantic  seaboard? 

Mr.  Lund.  I  do  not  remember  quoting  any  rates  on  domestic  traffic 
the  last  six  months  to  the  Atlantic  seaboard. 

Mr.  Day.  Have  you  on  export  traffic? 

Mr.  Lund.  I  have  on  export  provisions. 

Mr.  Day.  What  is  the  lowest  rate  you  quoted  on  export  provisions! 

Mr.  LiiND.  The  lowest  rate  I  remember  is  35  cents  per  hundred  pounds 
from  Kansas  City  to  New  York  for  export.    That  is  my  recollection. 

Mr.  Day.  When  was  that? 

Mr.  Lund.  That  was  in  December. 

Mr.  Day.  How  low  a  rate  have  you  quoted  on  export  since  January  1? 

Mr.  Lund.  I  have  not  quoted  a  rate  on  export  since  January  1. 


APPENDIX    G.  287 

Mr.  Day.  Have  not  you  participated  in  that  business? 

Mr.  Lund.  We  handle  some  business,  I  understand  frcfm  the  billing. 

Mr.  Day.  What  rate  did  fliat  carry? 

Mr.  Lund.  As  far  as  I  know,  the  full  tariff.  . 

Mr.  Day.  You  mean  the  published  tariftl 

Mr.  Lund.  Yes,  sir;  18i  cents  to  the  river. 

]\Ir.  Day.  And  35  cents"' on? 

Mr.  Lund.  We  did  not  handle  the  business  beyond. 

Mr.  Day.  To  whom  did  you  turn  that  over? 

Mr.  Lund.  Various  lines. 

Mr.  Day.  What  lines  from  the  Mississippi? 

Mr.  Lund.  It  would  be  handled  by  any  line  leading  from  the  Missis- 
sippi River. 

Mr.  Day.  The  Mobile  and  Ohio? 

Mr.  Lund.  The  Mobile  and  Ohio. 

Mr.  Day.  The  Clover  Leaf? 

Mr.  Lund.  The  Clover  Leaf.  The  Mobile  and  Ohio  can  not  handle 
the  !New  York  business,  though. 

Mr.  Day.  Does  the  Mobile  and  Ohio  take  some  south  and  connect 
with  the  Southern,  and  then  come  in  by  the  Southern? 

Mr.  Lund.  I  do  not  know  of  any  tliat  way. 

Mr.  Day.  The  trafBc  that  went  by  the  Mobile  and  Ohio  by  your  road 
•  went  through  the  Gulf? 

Mr.  Lund.  Yes,  sir;  it  goes  through  Mobile. 

Mr.  Day.  Now,  the  traffic  you  turned  over  to  the  Clover  Leaf  since 
the  1st  of  January,  what  rate  did  you  quote  through  to  the  seaboard? 

]\Tr.  Lund.  I  made  no  rates  at  all. 

Mr.  Day.  You  simply  made  a  rate  up  to  the  Mississippi  River? 

Mr.  Lund.  Made  no  rate  at  all;  did  not  even  quote  a  rate. 

Mr.  Day.  What  rate  did  it  pay? 

Mr.  Lund.  Eighteen  and  a  half  cents,  to  the  best  of  my  knowledge. 

Mr.  Day.  Was  there  any  refund  or  rebate  made  on  that? 

Mr.  Lund.  Not  to  my  knowledge. 

Commissioner  Clements.  Did  it  go  on  a  through  rate  of  35  cents? 

Mr.  Lund.  I  do  not  know.  We  deliver  the  property  at  East  St. 
Louis,  and  that  ends  it  with  us. 

Commissioner  Clements.  I  understand  you  to  say  that  some  did  go 
on  a  through  rate  of  35  cents  from  here. 

Mr.  Lund.  That  is  business  I  contracted  for  myself  in  December. 

Commissioner  Fifer.  Was  that  for  foreign  shipment? 

Mr.  Lund.  Yes,  sir. 

Commissioner  Clements.  It  was  for  export? 

Mr.  Lund.  Yes,  sir. 

Commissioner  Peouty.  Wlfkt  was  your  division  of  that  rate,  35 
cents? 

Mr.  Lund.  I  really  do  not  know.  I  do  not  know  what  the  division 
of  that  would  be. 

Commissioner  Prouty.  Did  you  not  know  when  you  quoted  that 
rate,  made  that  contract,  how  much  of  it  your  line  was  to  get? 

Mr.  Lund.  No,  sir;  I  do  not  know  the  details  of  the  division. 

Commissioner  Prouty.  Were  you  instructed  by  your  superiors  to 
make  that  quotation? 

Mr.  Lund.  No,  sir. 

Commissioner  Prouty.  How  did  you  happen  to  make  that  low 
export  rate? 


288  APPENDIX    G. 

Mr.  Lund.  It  was,  I  supposed,  the  current  basis  in  effect  ab  the  time 
the  sbipments  were  made. 

Commissioner  Prouty.  What  determines  the  current  basis?  Who 
tells  you  what  thfe  basis  is — the  packer;  or  do  you  tell  the  packer? 

Mr.  Lund.  We  quote  the  rate  to  the  packer  to  handle  his  business. 

Commissioner  Prouty.  Tou  quoted  a  rate  of  35  cents  to  the  packert 

Mr.  Lund.  Yes,  sir. 

Commissioner  Prouty.  How  did  you  happen  to  quote  that  rate? 

Mr.  Lund.  I  quoted  it  from  my  own  mind — that  that  was  the  figure 
that  would  secure  the  traffic  at  that  time. 

Commissioner  Prouty.  What  led  you  to  suppose  that  that  figure 
would  secure  the  traffic? 

Mr.  Lund.  By  conditions  that  may  have  happened  previous — the 
previous  weeks,  for  instance. 

Commissioner  Prouty.  Well,  did  the  packer  tell  you  he  would  not 
pay  any  more  than  35  cents? 

Mr.  Lund.  I  do  not  remember  that. 

Commissioner  Prouty.  Had  you  tried  to  get  traffic  at  a  little  above 
that,  which  you  did  not  get? 

Mr.  Lund.  Tou  mean  on  that  specific  shipment? 

Commissioner  Prouty.  Yes,  sir. 

Mr.  Lund.  I  do  not  remember  the  details  of  it;  only  I  remember  I 
made  that  quotation. 

Commissioner  Prouty.  Do  you  have  a  general  understanding  among 
yourselves  with  the  packers  here  what  this  export  rate  should  be  at  a 
given  time? 

Mr.  Lund.  No,  sir;  not  to  my  knowledge. 

Commissioner  Prouty.  How  do  you  know  what  it  is? 

Mr.  Lund.  I  do  not  know  until  I  test  it  by  my  own  quotation. 

Commissioner  Prouty.  You  go  to  the  packer  and  offer  to  take  the 
traffic  for  so  much,  and  if  you  get  it  you  think  your  quotation  is  as  low 
as  the  going  rate.  If  you  do  not  get  it,  do  you  assume  there  is  a  lower 
rate? 

Mr.  Lund.  Tbat  is  the  only  means  I  have  of  knowing. 

Commissioner  Prouty.  You  say  you  made  this  rate  of  35  cents.  At 
that  time  what  was  the  published  division  east  of  the  Mississipiii  liiver — 
35  cents? 

Mr.  Lund.  I  think  it  was. 

Commissioner  Prouty.  So  you  might,  according  to  your  theory, 
have  to  carry  that  to  the  Mississippi  River  for  nothing? 

Mr.  Lund.  It  is  barely  possible. 

Commissioner  Prouty.  Do  you  know  what  line  it  went  by  beyond 
the  Mississippi  ?  , 

Mr.  Lund.  I  think  it  was  handled  via  a  line  to  Buffalo. 

Commissioner  Prouty.  Who  has  been  soliciting  this  traffic  that  has 
gone  over  your  line  since  January  1? 

Mr.  Lund.  I  do  not  know  of  anyone  but  myself. 

Commissioner  Prouty.  I  thought  you  said  you  had  not  solicited  any 
since  January  1  ? 

Mr.  Lund.  I  meant  export  business  and  Eastern  business.  We  solicit 
local  business  to  Illinois  and  those  points. 

Commissioner  Prouty.  By  what  fast-freight  line  did  that  go  since 
January  1. 

Mr.  Lund.  We  handled  it  to  St.  Louis  and  there  delivered  it  to  the 
line  to  which  it  was  consigned. 


APPENDIX   G.  289 

Commissioner  Prouty.  That  business  now  goes  from  here  over  the 
Mississippi  lliver  and  is  there  consigned  to  some  other  line? 

Mr.  Lund.  Yes,  sir. 

Commissioner  Prouty.  Now,  as  you  understand  the  matter,  who 
solicited  that  particular  traffic? 

Mr.  Lund.  1  do  not  know. 

Commissioner  Prouty.  Do  you  mean  to  say  at  the  present  time 
your  line  is  exacting  the  full  tariff  rate  on  both  export  and  domestic 
shipments? 

Mr.  Lund.  So  far  as  1  know,  yes,  sir. 

Commissioner  Prouty.  And  whatever  cut  there  is  is  beyond  the 
Mississippi  River? 

Mr.  Lund.  That  would  be  the  inference. 

Commissioner  Cle:ments.  Have  j^ou  ever  been  able  to  obtain  a  larger 
proportion  of  the  business  of  these  packing  houses  by  reason  of  very 
low  rates  on  foreign  shipments'? 

Mr.  Lund.  No,  sir;  I  never  solicited  business  on  that  basis  at  all. 

Commissioner  Clements.  Who  does  solicit  this  business  for  your 
road  now? 

Mr.  Lund.  I  do. 

Commissioner  Clements.  But  you  say  you  do  not  solicit  the  eastern 
or  foreign  business"? 

Mr.  Lund.  Yes,  sir. 

Commissioner  Clemicnts.  Who  does? 

Mr.  Lund.  I  do  not  think  it  is  being  solicited  at  all  for  our  road. 

Commissioner  Clements.  Is  there  no  solicitation  for  tliis  business 
on  the  part  of  any  of  the  roads  you  know  of? 

Mr.  Lund.  Tluit  I  can  not  say.  I  can  not  answer  for  anybody  but 
myself. 

Commissioner  Clements.  Why  is  your  road  careless  about  it? 

Mr.  Lund.  Unless  it  is  tliat  we  are  the  available  line  to  St.  Lonis  for 
handling  it.  We  only  handle  it  to  St.  Louis  and  that  is  the  only  means 
we  have  of  reaching  the  lines  to  which  it  is  consigned;  that  is,  at  St. 
Louis. 

Commissioner  Clements.  You  mean  that  is  not  the  way  most  of  it 
goes? 

Mr.  Lund.  That  is  the  way  most  of  it  is  going  at  tlie  present  time, 
by  St.  Louis. 

Commissioner  Clements.  By  your  road? 

Mr.  Lund.  We  handle  some  that  way. 

Commissioner  Clements.  It  comes  without  solicitation,  then,  does  it? 

Mr.  Lund.  Yes,  sir;  so  far  as  I  am  concerned. 

Commissioner  Clements.  Is  there  any  arrangement  or  contract  or 
prac^tice  of  any  kind,  either  understood  or  otherwise,  by  which  this 
business  is  apportioned  among  the  several  roads  leading  eastward  from 
Kansas  City? 

Mr.  Lunq.  Not  to  my  knowledge. 

Commissioner  Clements.  Has  there  been  at  any  time  during  the 
past  year? 

Mr.  Lund.  Not  that  I  know  of. 

Commissioner  Clements.  Every  road  is  free  to  take  all  it  can  get, 
carry  it,  and  retain  all  it  can  without  any  obligation  to  pay  any  back  to 
anybody? 

Mr.  Lund.  I  know  of  no  arrangement  of  that  kind. 

Commissioner  Clements.  Well,  why  is  it  you  do  not  solicit  it— pusli 
for  it? 

74lA— 05 19 


290  APPENDIX    G. 

Mr,  Lund.  I  am  satisfied  with  what  is  coming  to  us. 

Comiiiissiouer  Clements.  That  is  rather  a  modest  position  for  a  rail- 
road to  take,  is  it  not? 

Mr.  Lund.  Well,  it  is  a  fact  just  the  same. 

Commissioner  Fifer.  What  roads  carry  the  bulk  of  these  packing- 
bouse  products — what  roads  leading  out  of  Kansas  City  does  the  weight 
or  bulk  of  these  packing-house  products  pass  over? 

Mr.  Lund.  I  do  not  kuow.    I  could  not  say. 

Commissioner  Fifer.  Does  any  one  road  or  any  particular  set  of 
roads  carry  it  above  others? 

Mr.  Lund.  I  think  some  roads  carry  more  than  others  and  distri- 
l>ute  it. 

Commissioner  Prouty.  Is  there  not  an  account  kept  of  the  tonnage 
by  all  lines  from  Kansas  City? 

Mr.  Lund.  There  is  a  statement  kept  of  the  carloads. 

Commissioner  Prouty.  Who  keeps  that  statement? 

Mr.  Lund.  Tliat  is  kept  by  the  agent  of  the  Western  trunk  lines. 

Commissioner  Prouty.  Who  is  he? 

Mr.  Lund.  G.  A.  Kimball. 

Commissioner  Prouty.  He^e  in  Kansas  City? 

Mr.  Lund.  Yes,  sir. 

Commissioner  Prouty.  How  often  does  he  send  you  gentlemen  a 
statement? 

Mr.  Lund.  There  is  a  statement  furnished  us  every  day  of  the  carload 
business  out  of  this  i)oint. 

Commissioner  Prouty.  Does  any  other  line  solicit  now? 

Mr.  Lund.  I  do  not  kuow. 

Commissioner  Prouty.  You  do  not  find  that  their  solicitation  pro- 
duces any  effect  on  your  trafflc? 

j\Ir.  Lund.  It  has  not  this  year. 

Commissioner  Prouty.  Who  pays  this  gentleman  for  his  work  in 
sendiug  out  these  statements? 

]\Ir.  Lund.  I  think  it  is  done  by  the  lines  generally  in  the  associa- 
tion. 

Commissioner  Prouty.  What  association? 

Mr.  Lund.  The  Western  Trunk  Line  Association. 

Commmissioner  Prouty.  Do  you  kuow  about  what  part  of  this  traffic 
the  .Missouri  Pacific  gets? 

Mr.  Lund.  No,  sir. 

Commissioner  Prouty.  Do  you  know  what  part  the  other  lines  get? 

Mr.  Lund.  No,  sir. 

Commissioner  Prouty.  Do  you  not  see  his  statement? 

Mr.  Lund.  I  glance  over  it  from  day  to  day  to  see  what  we  handle. 

Commissioner  ProuTY.  Do  you  not  know  what  part  of  the  whole  you 
ought  to  handle? 

Mr.  Lund.  No;  I  do  not  know. 

Commissioner  Prouty.  About  what  part  have  you  handled? 

Mr.  Lund.  I  can  not  say  ofthand. 

Commissioner  Prouty.  I  wish  you  would  let  us  see  one  of  those 
statements.     Could  you  do  that? 

Mr.  Lund.  Yes,  sir.     You  mean  for  one  day? 

Commissioner  PROUTY.  Three  or  four  of  them,  so  that  I  can  see  what 
they  are. 

Commissioner  Cle:ments.  What  is  the  volume  of  business  by  the 
carload  by  the  day  or  week  or  mouth? 

Mr.  Lund,  It  varies.    Some  days  it  is  more  than  others. 


APPENDIX   G.  291 

Commissiouer  Clements.  Undoubtedly;  but  about  what  would  be 
an  average  week*? 

Mr.  Lund.  You  mean  for  all  lines? 

Commissioner  Clements.  Dressed  beef  and  packing-house  prod- 
ucts— all  lines'? 

Mr.  Lund.  You  mean  the  combined  total  number  of  carloads  for  a 
week? 

Commissioner  Clements.  Yes,  sir. 

Mr.  Lund.  You  mean  to  all  territory? 

Commissioner  Clements.  Foreign  and  eastern. 

Mr.  Lund.  I  should  say — of  course  these  are  not  facts — I  should  say 
600  to  700  cais  a  week,  perhaps  more. 

Commissioner  Clements.  Eastbound,  including  domestic  and 
foreign  ? 

Mr.  Lund.  Yes,  sir. 

Commissioner  Clements.  And  about  how  many  roads  lead  eastward 
from  Kansas  City  over  which  it  can  move? 

Mr.  Lund.  Did  you  say  how  many? 

Commissioner  Clements.  Yes,  sir. 

Mr.  Lund.  I  do  not  know.  I  would  have  to  count  them  up — twelve 
or  thirteen. 

Commissioner  Clements.  Well,  it  is  easily  ascertainable.     How  do 
you  account  for  the  fact  that  there  is  such  a  stillness  about  this  busi 
ness  in  regard  to  solicitation  that  it  is  allowed  to  find  its  way  out  the 
best  it  can?    It  has  not  always  been  that  way,  has  it? 

Mr.  Lund.  No,  sir. 

Commissiouer  Clements.  They  have  had  rate  wars  over  it  in  times 
past? 

Mr.  Lund.  There  have  been  rumors  of  disturbances  in  rates. 

Commissioner  Clements.  Well,  what  is  the  reason?  Everything 
that  exists  is  supposed  to  have  a  cause.  Why  has  it  changed,  so  that 
every  road  is  apparently  content  with  what  comes  to  it  without 
solicitation  ? 

Mr.  Lund.  I  do  not  know  why  it  is.  I  know  only  so  far  as  our  own 
line  is  concerned,  it  must  be  on  account  of  the  service.  We  are  the 
short  line  from  here  to  East  St.  Louis,  and  our  service  considered  the 
best  from  here  to  that  point. 

Commissioner  Clements.  Well,  that  M'ould  not  be  very  satisfactory 
to  the  roundabout  roads  that  wanted  to  get  a  part  of  it,  would  it? 

Mr.  Lund.  That  I  can  not  say.    I  do  not  know  how  they  would  feel. 

Commissioner  Clements.  You  can  not  assign  any  reason  for  the 
fact  that  there  are  practically  no  solicitations  now  for  this  business? 

Mr.  Lund.  No,  sir;  I  can  not  assign  any  reason. 

Mr.  Day.  These  shipments  you  spoke  of  that  left  in  February,  that 
went  by  the  Wabash  and  Clover  Leaf,  whose  shipments  were  those? 

Mr.  Lund.  I  do  not  remember. 

Mr.  Day.  You  spoke  of  paying  some  money  on  account  of  export 
traffic  secured. 

Mr.  Lund.  That  was  business  I  secured  in  December. 

Mr.  Day.  What  concern  ? 

Mr.  Lund.  Schwarzschild  &  Sulzberger. 

Mr.  Day.  What  was  the  basis  of  the  refund? 

Mr.  Lund.  Based  on  a  oO-cent  rate  I  quoted  from  Kansas  City  to 
New  York. 

Mr.  Day.  What  had  they  actually  paidY 


292  APPENDIX   Q. 

Mr,  Lund.  Fifty-three  and  a  half  cents. 

Mr.  Day.  Who  did  you  make  the  payment  toT 

Mr.  Lund.  Mr.  Cusey. 

Mr.  Day.  What  is  his  position? 

Mr.  Lund.  I  do  not  know  what  position  he  has. 

Mr.  Day.  When  was  it  you  made  the  payment? 

Mr.  Lund.  I  do  not  remember  that.  I  think  the  latter  part  of 
December.     I  am  not  certain. 

Mr.  Day.  Approximately,  what  was  the  amount  of  iti 

Mr.  Lund.  1  do  not  remember  just  exactly. 

Mr.  Day.  Well,  about? 

Mr.  Lund.  I  do  not  know. 

Mr.  Day.  Was  it  made  on  a  claim  presented  to  you — a  statement,  a 
claim  made  to  you  in  writing"? 

Mr.  Lund.  No;  they  made  no  statement  to  me  in  writing.  I  made 
the  statement  up  myself  on  the  business  I  handled. 

Mr.  Day.  That  is  all. 

Commissioner  Clements.  Mr.  Day,  what  is  the  name  of  the  witness 
that  was  called  this  morning  who  did  not  answer? 

Mr.  Day.  Mr.  M.  M.  Vincent. 

Commissioner  Clements.  Is  Mr.  Vincent  in  court? 

(No  response.) 

Commissioner  Clements.  He  appears  not  to  be  here.  All  the  wit- 
nesses we  have  been  able  to  subpoena,  with  the  exception  of  Mr.  Vin- 
cent, have  been  sworn  and  examined,  and  it  is  manifest  that  information 
which  we  wanted  about  certain  matters  can  not  be  had  from  the  wit- 
nesses whose  attendance  we  have  been  able  to  secure,  and  that  on  those 
points  others  will  be  necessary.  Therefore,  the  hearing  of  this  matter 
will  now  be  suspended  to  such  other  time  and  place  as  the  Conmiission 
may  fix,  then  to  be  proceeded  with.  With  that  understanding  we  will 
adjourn. 

At  3.50  o'clock  p.  m.  the  Commission  adjourned. 


At  a  general  session  of  the  Interstate  Commerce  Commission,  held  at 
its  oliice  in  Washington,  D.  0.,  on  the  19th  day  of  December,  A.  D.  1001. 

Present:  Hon.  Martin  A.  Knapp,  chairman,  Hon,  Judson  (3. Clements, 
Hon.  James  D.  Yeomans,  Hon.  Charles  A.  Prouty,  Hon.  Joseph  W. 
Fifer,  commissioners. 

IN  THE   MATTER  OF   THE  TRANSPORTATION   OF   DRESSED  MEATS  AND   PACKING- 

HOUSE  PRODUCTS. 

Ordered,  That  this  matter  be  set  down  for  hearing  at  United  Stater 
court  rooms  in  the  city  of  Chicago,  111.,  on  January  7, 1902,  at  10  o'clock 
&.  m. 

BEFORE  THE  INTERSTATE  COMMERCE  COMMISSION. 

IN  THE  MATTER  OF  THE  TRANSPORTATION   OF   DRESSED  MEATS  AND   PACKINQ- 

HOUSE  PRODUCTS. 

Hearing  at  Chicago,  III.,  January  7, 1902, 

Present:  Hon.  Martin  A.  Knapp,  Hon.  Judson  C.Clements,  Hon.  J.D. 
Yeomans,  Hon.  C.  A.  Prouty,  and  Hon.  Josei)h  W.  Fifer,  commissioners. 
Mr.  W.  A.  Day,  for  the  Commission. 

INDEX. 

Page. 

Bird,  A.  C 365 

Cost,  Edward  F 330,  334 

Grammer,  G.  J 377 

Johnson,  J.  M 347 

McCabe,  D.  T 318,  334 

Miller,  Thomas 356 

Mitchell,  B.  B 335 

Morton,  Paul 371 

Wann,  Fred  A 359 

Whitney,  CD 293 

United  States  Court  Room, 
Chicago,  111.,  January  7,  1902 — 10  a.  m. 
The  Chairman.  Gentlemen,  please  give  us  your  attention.    The 
Commission  is  here  this  morning  to  resume  its  inquiry  in  the  matter  of 
the  transportation  of  dressed  beef  and  packing-house  products.    Mr. 
Day,  are  you  ready  to  proceed? 
Mr.  Day.  Yes,  sir. 

C.  D.  Whitney,  having  been  duly  sworn,  testified  as  follows: 

Mr.  Day.  Your  name  is  C.  D.  Whitney? 
Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  And  you  are  traffic  manager  of  what  road? 
Mr.  Whitney.  Of  the  Toledo,  bt.  Louis  and  Western. 
Mr.  Day.  How  long  have  you  been  connected  with  that  roadf 
Mr.  Whitney.  Since  August  1,  1900. 

Mr.  Day.  With  what  road  were  you  connected  prior  to  that  timet 

293  ' 


294  APPENDIX   Q. 

Mr.  Whitney.  The  Ohio  Southern. 

Mr.  Day.  Mr.  Whitney,  the  Commission  is  here  for  the  purpose  ol 
having  you  tell  them  the  methods  that  prevail  on  your  road  respecting 
the  transportation  of  packing-house  products  and  dressed  meats,  and 
particularly  with  regard  to  concessions  in  rates  that  have  prevailed 
on  your  line  or  that  may  have  prevailed  there.  Take  a  period  of  six 
months  prior  to  January  1,  1902. 

Mr.  Whitney.  In  what  way  do  you  mean? 

Mr.  Day.  In  whatever  way  that  may  have  prevailed.  Have  you 
made  any  concessions  or  has  your  road  made  any  concessions  from  the 
published  rates  in  the  transportation  of  packing-house  products  or 
dressed  meats  during  that  period? 

Mr.  Whitney.  Yes. 

•  Mr.  Day.  Please  state  in  your  own  way  how  that  was  brought  about; 
first,  what  the  concession  was. 

The  Chairman.  First,  on  shipments  from  what  point? 

Mr.  Day.  From  the  Missouri  River  and  Chicago  to  Atlantic  seaboard 
j)oints,  both. 

Mr.  Whitney.  It  is  the  rule  to  meet  conditions.  That  is  the  meat 
of  the  whole  thing.  If  a  rate  from  the  Missouri  River  is  made  to  the 
Atlantic  seaboard  through  Chicago,  it  follows  that  the  lines  through 
St.  Louis  must  meet  it  or  go  out  of  the  business. 

Mr.  Day.  Well,  the  rate  on  dressed  meats  from  Kansas  City  to  the 
Mississippi  River  was  what — the  published  rate  was  what? 

Mr.  Whitney.  From  where? 

Mr.  Day.  From  the  Missouri  River  to  the  Mississippi  River,  to  St. 
Louis? 

Mr.  Whitney.  Eighteen  and  one-half  cents. 

Mr.  Day.  And  the  rate  from  Kansas  City  to  Chicago  was  23J  cents? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  And  the  rate  from  Kansas  City  to  New  York  was 

Mr.  Whitney.  Sixty-eight  and  one  half  cents. 

Mr.  Day,  That  is  on  dressed  meats? 

Mr,  Whitney.  Yes,  sir. 

Mr.  Day.  Now,  the  rate  on  packing-house  products  was  18J  cents  to 
the  river? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  And  23i  cents  to  Chicago? 

Mr.  Whitney.  Yes,  sir ;  a  through  rate  of  53i  cents. 

Mr.  Day.  What  concession  from  the  published  rate — first,  did  you 
participate  in  the  transportation  of  either  of  those  products  to  Chicago? 

Mr.  Whitney.  To  Chicago? 

Mr.  Day.  Yes,  sir. 

Mr.  Whitney.  No,  sir. 

Mr.  Day.  What  traffic  did  you  participate  in?  For  what  general 
destination  ? 

Mr.  Whitney.  Do  you  mean  on  dressed  beef  and  provisions? 

Mr.  Day.  Yes,  sir. 

Mr.  Whitney.  We  have  handled  some  dressed  beef  and  provisions 
from  the  Missouri  River  to  New  York  and  Boston, 

Mr.  Day.  Now,  what  concessions  did  you  make,  or  did  your  line  par- 
ticipate in  making,  in  the  way  of  diminution  of  the  rate  of  68J  cents 
during  the  period  I  mentioned? 

Mr.  Whitney.  We  made  a  rate  of  41|  cents  from  East  St.  Louis  to 
New  York  and  Boston. 


APPENDIX    G.  295 

Mr.  Day.  And  what  was  the  published  rate  at  that  time  from  East 
St.  Louis? 

Mr.  Whitney.  Fifty  cents. 

Mr.  Day.  Is  that  the  greatest  or  largest  reduction  you  have  made? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  Now,  what  reduction  did  you  make  on  packinghouse 
products  ? 

Mr.  Whitney.  We  made  a  rate  of  29  cents. 

Mr.  Day.  That  was  a  reduction  of  6  cents? 

Mr.  Whitney.  Yes,  sir;  6  cents.  That  was  the  greatest.  It  don't 
follow  that  that  was  continuous;  simply  that  it  went  that  low. 

Mr.  Day.  You  have  stated  the  lowest  rate  you  particiijated  in  ? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  Take  this  New  York  and  Boston  traffic  that  you  hauled. 
Where  was  the  point  of  departure  from  your  rails? 

Mr.  Whitney.  Some  of  it  went  via  Ohio  City  and  the  Erie  and  its 
connections,  some  via  Continental,  the  Nickel  Plate  road  aud  its  con- 
nections, some  via  Toledo  and  the  Michigan  Central  Eailroad  and  its 
connections,  and  some  via  Toledo  and  theLake  Shore  and  its  conuectious. 

Mr.  Day.  Your  Western  and  Eastern  termini  are  East  St.  Louis  and 
Toledo? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  What  was  your  division  of  the  haul  of  Kansas  City-New 
York  packing-house  products  where  you  turned  it  over  to  the  Eastern 
line  at  Toledo? 

Mr.  Whitney.  You  mean  the  division  of  the  proportion  from  St. 
Louis  ? 

Mr.  Day.  Yes,  sir. 

Mr.  Whitney.  It  is  made  up  on  a  mileage  basis.  It  runs  about  35 
per  cent. 

Mr.  Day.  How  much  of  your  division  did  you  shrink  out  of  that  29 
cents  packing  house  product  rate? 

Mr.  Whitney.  Our  proportion. 

Mr.  Day.  What  did  that  amount  to  on  that? 

Mr.  Whitney.  About  35  per  cent  of  0— about  2  cents. 

Mr.  Day.  Now,  who  else  participated  in  the  shrinking  of  that  rate? 

Mr.  Whitney.  I  have  stated  the  routes  that  we  have  used  on  our 
traffic. 

Mr.  Day.  Did  they  all  join  in  the  shrinkage?  Did  all  the  lines  par- 
ticipate in  it  from  the  Mississippi  Eiver,  or  was  it  borne  alone  by  your 
road? 

Mr.  Whitney.  On  the  authorized  rates?  These  rates  that  I  have 
mentioned  are  what  we  call  the  current  rate. 

Mr.  Day.  Now,  the  published  rate  being  35  cents  from  the  Missis- 
sippi Eiver  to  New  York,  you  say  you  carried  traffic  as  low  as  29  cents? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  Now,  in  the  reduction  of  that  rate  of  G  cents  a  hundred,  in 
that  reduction  did  your  road  stand  all  of  that,  or  did  all  of  the  lines  that 
participated  in  the  haul  of  the  traffic  from  the  Mississippi  River  to  the 
Atlantic  seaboard  divide  it? 

Mr.  Whitney.  I  can  not  answer  whether  all  the  lines  joined  or  not. 
The  bills  are  put  in  the  claim  department  and  collected.  1  do  not  know 
how  they  were  collected. 

Mr.  Day.  Who  authorizes  this  reduction  when  it  is  done  on  your 
line? 


296  APPENDIX    Q. 

Mr.  Whitney.  There  is  really  no  sucL  thing  as  authorizing  it.  You 
test  the  market  and  find  the  rate  is  so  and  so,  or  by  discussion  it  is 
brought  out  that  the  rates  are  what  we  use.  There  is  no  such  thing  as 
authorizing  it. 

Mr.  Day.  Your  subordinates  would  not  put  in  a  29-cent  rate  without 
some  authority  to  do  that,  would  they? 

Mr.  Whitney.  No,  sir. 

Mr.  Day.  What  authority  do  they  get  to  rely  upon? 

Mr.  Whitney.  On  my  authority. 

Mr.  Day.  How  do  you  express  it  to  them  ?  How  have  you  authorized 
it?    What  form  has  your  authorization  taken? 

Mr.  Whitney.  Nothing  more  than  advice  that  conditions — for 
instance,  that  conditions  at  the  i)resent  time — I  do  not  mean  now,  but 
when  there  was  a  29-ceut  rate;  if  there  was  a  29-cent  rate  I  would  tell 
them  they  could  make  that  rate. 

Mr.  Day.  What  concerns,  what  packing-house  concerns,  chiefly  employ 
your  line,  or  did  six  months  prior  to  January  1? 

Mr.  Whitney.  I  could  not  follow  that  up  closely.  For  instance,  we 
give  our  agent  authority  to  make  a  29-cent  rate.  I  do  not  know  who 
he  gives  it  to  or  what  business  he  gets  on  it.  Perhaps  he  don't  get 
anything.  Perhaps  we  have  had  some  from  all  of  them  with  one  or  two 
exceptions. 

Mr.  Day.  You  have  some  that  use  your  line  pretty  generally  all  the 
time? 

Mr.  Whitney.  Oh,  no;  we  do  not  have  any  that  use  it  all  the  time. 

Mr.  Day.  I  do  not  mean  all  the  time.  I  suppose  every  road  has  its 
customers  that  it  largely  relies  on? 

Mr.  Whitney.  I  do  not  think  the  proviwsion  business  is  handled  that 
way. 

Mr.  Day.  How  about  dressed  meats? 

Mr.  Whitney.  Dressed  meats  are  usually  shipped  right  along  on 
accduut  of  the  arrangements  they  have  on  a  line  for  icing,  and  so  on. 

Mr.  Day.  What  concerns  have  employed  your  line  in  the  shipment 
of  dressed  meats  ? 

Mr.  Whitney.  Since  the  1st  of  July? 

Mr.  Day.  Yes,  sir. 

Mr.  Whitney.  We  have  not  had  any  dressed  meats  from  Kansas 
City  since  the  1st  of  July. 

Mr.  Day.  Well,  all  kinds. 

Mr.  Whitney.  We  have  had  no  dressed  meats  from  Kansas  City 
since  the  1st  of  July. 

Mr.  Day.  What? 

Mr.  Whitney.  Provisions. 

Mr.  Day.  What  concerns  have  employed  your  line? 

Mr.  Whitney.  I  could  not  tell  you.  Possibly  we  have  had  them 
from  the  Cudahy  Packing  Company,  and  perhaps  from  Fowler,  and 
perhaps  from  Schwarzschild  &  Sulzberger;  I  don't  know.  I  could  not 
say  positively. 

Mr.  Day.  When  the  concession  was  made  you  say  it  was  handled 
through  the  claims  department.  Did  the  billing  show  the  published 
rate,  or  would  the  billing  show  the  reduced  rate? 

Mr.  Whitney.  The  billing  would  show  the  published  rate  up  until 
very  recently,  when  it  was  billed  flat. 

Mr.  Day.  How  recently  was  it  billed  flat?  When  did  you  commence 
that? 


APPENDIX    G.  297 

Mr.  Whitney.  I  think  along  abont  tlie  1st  of  August — somewhere 
between  the  15th  of  July  and  the  1st  of  August. 

Mr.  Day.  Was  that  about  the  time  you  put  in  the  export  rate — the 
published  through  export  rate? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  Now,  when  the  billing  showed  the  published  rate  and  the 
traffic  was  actually  carried  at  a  reduced  rate,  just  state  how  those  claims 
were  presented  and  how  they  were  vised  or  approved? 

Mr.  Wiiii'NEY.  I  do  not  think  I  would  be  competent  to  say  that, 
because  they  are  not  handled  in  my  ollice. 

Mr.  Day.  But  you  are  cognizant  of  tlieir  adjustment,  are  you  not? 
Your  office  had  to  give  some  approval  or  ratification  of  it. 

Mr.  Whitney.  We  give  our  claims  department  instructions  that  the 
current  rate  is  so  much,  and  if  a  claim  is  presented  later  on  that  tallies 
with  that  previous  advice  the  claim  is  no  doubt  settled  on  that  basis. 

Mr.  Day.  How  would  the  claims  department  get  the  advice  that  the 
buvsiuess  was  actually  carried? 

Mr.  Whitney.  From  the  billing. 

Mr.  Day.  During  the  year  1001  was  there  traffic  carried  on  your 
line— that  is,  traffic  that  we  are  discussing  here,  dressed  meats  and 
packing-house  products— carried  at  all  on  underbilling  as  to  weights  or 
in  any  other  form  ? 

Mr.  Whitney.  Not  that  I  know  of. 

Mr.  Day.  Was  shrinkage  made  in  any  other  form,  or  was  concession 
in  any  other  way  made  than  in  the  iiarticular  way  you  have  named? 

Mr.  Whitney.  No,  sir. 

Mr.  Day.  There  was  no  false  billing  or  underweights  that  prevailed 
on  your  line  that  you  had  any  intimation  of? 

Mr.  Whitney.  No,  sir. 

Mr.  Day.  What  is  the  practice  prevailing  now  regarding  packing- 
house products? 

Mr.  Whitney.  Since  the  1st  of  January — why,  we  have  had  nothing 
but  the  full  i)ublished  tariff  rate. 

Mr.  Day.  Why  did  you  stop  that  practice  on  the  1st  of  January,  or 
did  you  cease  that  practice  before? 

Mr.  Whitney.  It  is  a  kind  of  unwritten  law  that  rates  on  the  first 
of  the  year  become  what  we  call  firm,  and  everyone  tries  to  keep  them 
in  that  condition.  We  start  out  on  the  first  of  the  year  and  try  to 
maintain  them. 

Mr.  Day.  Prior  to  the  1st  of  July  you  were  carrying  some  dressed 
meats,  in  the  year  1901? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  Who  did  you  carry  dressed  meats  for? 

Mr.  Whitney.  For  Schwarzschild  »&  Sulzberger  from,  I  think,  Janu- 
ary 1  to  June  1,  and  we  carried  for  Cudahy  from  January  1,  I  think  it 
was,  to  April  1. 

Mr.  Day.  For  anyone  else — that  is,  of  the  large  concerns? 

Mr.  Whi'J'NEY.  No;  not  from  Kansas  City. 

Mr.  Day.  Well,  from  St.  Louis? 

Mr.  Whitney.  Swift  &  Co.  from  East  St.  Louis,  and,  I  think  a  part 
of  their  Kansas  City  business  also.     We  do  not  get  that  now. 

Mr.  Day.  What  concessions  from  the  established  rates — the  published 
tariff  rates — were  made  on  dressed  meats? 

Mr.  Whitney.  On  the  dressed  beef? 

Mr.  Day.  Yes,  sir. 

Mr.  Whitney.  I  do  not  know  that  I  could  tell  you  now. 


298  APPENDIX    G. 

Mr.  Day.  Well,  about,  approximately? 

Mr.  Whitney.  I  think  it  was  in  tlie  neighborhood  of  5  cents. 

Mr.  Day.  From  Kansas  City  or  St.  Louis? 

Mr.  Whitney.  Of  course  our  revenue  begins  at  East  St.  Louis. 

Mr.  Day.  Do  you  know  what  was  made  back  of  the  Mississippi 
River? 

Mr.  Whitney.  I  could  not  tell  you  positively,  because  it  would  not 
be  a  positive  opinion. 

Mr.  Day.  What  is  your  impression? 

Mr.  Whitney.  I  do  not  know  that  I  have  a  right  to  express  that. 

Mr.  Day.  You  acted  on  rumors  as  to  reduction  of  rates  that  you  con- 
sidered you  were  compelled  to  meet  elsewhere,  I  understand.  What 
was  the  rumor  prevailing  at  that  time? 

Mr.  Whitney.  The  rumor  prevailed  that  the  rate  from  concession 
was  reduced  5  cents  from  Kansas  City  to  the  seaboard. 

Mr.  Day.  Is  that  the  greatest  concession  you  heard  of  that  prevailed 
on  dressed  meats — 5  cents,  Kansas  City  to  the  Atlantic  seaboard? 

Mr.  Whitney.  That  is  a  year  ago  and  I  do  not  remember  distinctly, 
but  that  is  my  impression. 

Mr.  Day.  Was  the  concession  greater  in  regard  to  packing-house 
products  than  it  was  in  regard  to  dressed  meats? 

Mr.  Whitney.  I  do  not  think  there  was  any  concession  the  first  of 
the  year.  As  a  matter  of  fact,  we  do  not  handle  many  provisions.  It 
is  only  now  and  then  that  we  handle  them. 

Mr.  Day.  Tell  the  commission  specifically  what  induced  you  to 
authorize  your  subordinates  to  cut  the  rate. 

Mr.  Whitney.  Well,  as  I  say,  the  St.  Louis  line  would  have  to  do 
that  in  order  to  get  any  business  from  the  Missouri  Eiver.  If  a  rate  is 
made  through  Chicago  and  it  is  less  than  the  rate  that  could  be  obtained 
through  East  St.  Louis  on  the  combination  of  locals,  it  follows  that  you 
have  to  meet  that  rate  through  St.  Louis. 

Mr.  Day.  You  mean  that  the  published  rates  by  way  of  Chicago  to 
the  seaboard  were  lower  than  the  sum  of  the  locals  bj'^  way  of  St.  Louis? 

Mr.  Whitney.  No  ;  because  the  published  tariffs  through  Chicago 
are  supposed  to  be  the  same  as  the  published  tariifs  through  St.  Louis. 

Mr.  Day.  Then  it  was  a  reduced  rate,  lower  than  the  published  rate, 
that  prevailed  through  Chicago  that  induced  you  to  make  a  reduction 
from  the  published  tariff"  rate? 

Mr.  Whitney,  Yes,  sir. 

Mr.  Day.  Did  you  ascertain,  as  a  matter  of  fact,  that  a  lower  rate  did 
prevail  by  way  of  Chicago  than  the  lawful  published  rate? 

Mr.  Whitney.  We  ascertained  as  near  as  we  could  in  those  cases.  If 
the  business  was  moving  continually  through  Chicago  and  you  can  not 
get  anything  through  St.  Louis,  why 

Mr.  Day.  Is  the  time  longer  or  shorter  by  way  of  St.  Louis  than  by 
way  of  Chicago. 

Mr.  Whitney.  I  think  the  time  through  St.  Louis  is  just  as  quick  as 
through  Chicago. 

Mr.  Day.  Is  it  just  as  short? 

Mr.  Whitney.  I  have  not  figured  it  in  miles,  but  in  time  we  make 
as  good  time  as  through  Chicago. 

Mr.  Day.  Is  there  any  advantage  of  one  route  over  another  in  prompt 
delivery,  or  as  to  less, expense,  prompter  icing,  etc.? 

Mr.  Whitney.  I  don't  know.  After  a  line  starts  to  ship  dressed 
beef  by  a  certain  route  they  usually  follow  it  up  through  the  year, 
because  they  have  their  arrangements  made  for  that  route. 


APPENDIX  a.  299 

Mr.  Day.  I  have  heard  it  said,  in  attempted  jnstification  by  some 
traffic  men  who  represent  lines  through  Chicago,  that  where  reductions 
from  the  published  rate  were  made  via  Chicago  it  was  because  of  the 
wickedness  of  the  lines  via  St.  Louis. 

Mr.  Whitney.  Yes,  sir;  Chicago  claims  it  is  St.  Louis  and  St.  Louis 
claims  it  is  Chicago,  and  sometimes  Peoria  comes  in  for  her  share. 

Mr.  Day.  Is  that  the  cause  of  reducing  the  ratel 

Mr.  Whitney.  That  is  the  principal  cause.  We  have  Gulf  competi- 
tion on  export  that  affects  rates  through  Chicago,  Peoria,  and  St. 
Louis  and  other  gateways. 

Mr.  Day.  Does  this  reduction  in  rate  apply  equally  to  traffic  des- 
tined for  domestic  consumption  as  to  export? 

Mr.  Whitney.  Oh,  no;  we  are  talking  about  export  business. 

Mr.  Day.  Do  yon  mean  to  be  understood  as  saying  that  you  carried 
no  domestic  traffic  at  a  rate  below  the  published  rate? 

Mr.  Whitney.  We  may  have. 

Mr.  Day.  What  is  the  fact? 

Mr.  Whitney.  I  could  not  tell  you.  That  is  a  matter  of  detail  that 
I  was  not  prepared  for.  1  had  no  notice  of  what  was  to  be  taken  up 
here  to-day. 

Mr.  Day.  Who  of  your  subordinates  would  know? 

Mr.  Whitney.  It  is  merely  a  question  of  record. 

Mr.  Day.  Your  records  will  disclose? 

Mr.  Whitney.  I  suppose  our  records  would  tell,  of  course. 

Mr.  Day.  Who  has  charge  of  those  records? 

Mr.  Whitney.  They  are  the  company  records. 

Mr.  Day.  I  assume  that,  of  course,  but  who  is  the  particular  indi- 
vidual who  has  charge  of  those  records? 

Mr.  Whitney.  You  mean  of  our  claim  department? 

Mr.  Day.  Yes,  sir. 

Mr.  WhiTxNEY.  Mr.  W.  F.  Booth  is  our  general  auditor. 

Mr.  Day.  Is  Mr.  Booth  the  man  who  adjusts  those  claims  on  packing- 
house products  and  dressed  beef? 

Mr.  Whitney.  He  would  do  nothing  more  than  carry  out  the 
iustructiojis  I  gave  him  as  to  the  rate. 

Mr.  Day.  Do  these  bills  of  lading  or  these  bills  that  accompany  the 
traffic,  waybills  some  people  call  them 

Mr.  Whitney.  Waybills  or  manifests. 

Mr.  Day.  Would  they  show  whether  it  was  export  or  domestic? 

Mr.  Whiitney.  Yes,  sir. 

Mr.  Day.  He  relies  on  that? 

Mr.  Whitney.  You  have  to  have  an  export  bill  of  lading.  We  would 
not  consider  business  billed  locally  to  New  York  with  the  simple  nota- 
tion "for  export"  as  export;  we  would  not  recognize  that.  It  must  be 
a  bona  fide  export  shipment,  accompanied  by  an  export  bill  of  lading, 
booked  for  a  certain  steamship  for  a  certain  day's  sailing.  That  would 
become  an  export  shipment. 

Mr.  Day.  Do  they  present  that  bill  of  lading  for  settlement? 

Mr.  Whitney.  If  it  was  flatbilled,  that  would  end  it  so  far  as  the 
shipper  was  concerned. 

Mr.  Day.  How  if  it  was  not  flatbilled? 

Mr.  Whitney.  If  it  was  not  flatbilled  that  bill  of  lading  would  have 
to  be  the  evidence  of  the  export  shipment. 

Mr.  Day.  1  think  that  is  all  I  will  ask  Mr.  Whitney  now. 
Commissioner  Fifer.  Is  there  any  reason  why  a  rate  for  export  ship- 
ments can  not  be  maintained — the  regular  rate? 


300  APPENDIX   G, 

Mr.  Whitney.  Do  you  mean  the  regular  tariff  rate  for  export  busi- 
ness? 

Commissioner  Fifer.  Is  there  any  reason  why  a  regular  published 
rate  can  not  be  maintained  on  export  business? 

Mr.  Whitney.  Yes.  The  different  steamship  lines,  which  we  do  not 
regulate  as  far  as  their  rates  are  concerned,  make  rates  from  different 
points  and  you  have  to  adjust  rates  accordingly.  For  instance,  if  a 
rate  from  Kansas  City  to  London,  England,  is  established  via  some 
X>articular  route,  you  have  got  to  meet  that.  If  your  rate  is  not  the 
same  as  the  rate  via  the  route  which  originally  made  it,  you  have  to 
make  it  via  any  route  you  use.     We  would  have  to  reduce  our  rate. 

Commissioner  Fifer.  But  your  charge  is  only  to  the  seaboard,  and 
what  has  that  to  do  with  unsettling  rates  for  export  shipment — when 
your  charge  is  only  to  the  seaboard? 

Mr.  Whitney.  We  have  to  make  the  same  through  rate  and  guar- 
antee it,  and  the  shipment  is  booked  to  the  steamshij^  company. 

Commissioner  Fifer.  That  would  apply  to  domestic  shipments  just 
as  well. 

Mr.  Whitney.  No;  because  domestic  shipments  are  not  interfered 
with  by  the  rates  made  beyond  our  points. 

Commissioner  Fifer.  You  are  compelled  to  adjust  your  rates  so  as 
to  get  business  and  not  allow  other  roads  to  carry  it  all? 

Mr.  Whitney.  Well,  I  do  not  know  that  I  understand  your  point 
there;  but  you  ask  there  if  the  rate  to  New  York  could  not  be  maintained, 
for  instance,  regardless  of  what  rate  was  made  through  Boston,  or  Port- 
land, Montreal,  or  Philadelphia.  I  say  we  can  not  do  that,  because  the 
rate  through  Boston,  Montreal,  or  Portland  might  be  out  of  line  with 
the  rate  via  New  York  via  the  steamship  lines.  It  would  simply  be 
adjusting  to  meet  the  through  rate. 

Commissioner  Fifer.  What  proportion  of  our  export  shipments  are 
carried  by  regular  line  steamers?     Do  you  know? 

Mr.  Whitney.  I  could  not  tell  you.  The  fact  of  its  being  a  regular 
line  would  not  mean  that  rates  are  always  the  same  by  that  line,  because 
ocean  rates  fluctuate.  I  understand  that  if  they  are  short  of  tonnage 
by  some  port,  why  their  rates  go  down  in  order  to  fill  up  their  boats, 
and  that  would  affect  another  port.  I  may  be  misinformed  on  that, 
however. 

Commissioner  Fifer.  Suppose  all  the  roads  reaching  the  seaboard 
established  and  maintained  the  published  rate;  could  they  not  do  that 
irrespective  of  what  the  ocean  rate  might  be? 

Mr.  Whitney.  I  do  not  think  they  could. 

Commissioner  Fifer.  Your  testimony  here  all  relates,  when  you 
speak  of  cut  rates,  to  export  shipments? 

Mr.  Whitney.  Yes,  sir;  except  as  I  have  stated  of  the  domestic,  as 
to  which  I  could  not  answer. 

Commissionc)'  Fifer.  You  have  not  stated  anything. 

Mr.  Whitney.  I  stated  I  could  not  answer  now;  but  it  is  a  matter 
of  record  which  could  be  easily  determined. 

Commissioner  Fifer.  Do  you  publish  any  rate  for  export  goods? 

Mr.  Whitney  .  No. 

Commissioner  Fifer.  That  is  all. 

Commissioner  Prouty.  Do  you  publish  an  export  rate  for  export 
wheat  or  flour? 

Mr.  Whitney.  No,  sir. 

Commissioner  Prouty.  Do  you  participate  in  that  business  f 


APPENDIX   G.  301 

Mr.  Whitney.  We  occasionally  have  export  shipments  of  flour  and 
wheat. 

Commissioner  Prouty.  Don't  you  concur  in  these  rates  published 
by  other  carriers  on  export  wheat  and  flour? 

Mr.  Whitney.  The  rates  being  divided  on  the  river  on  an  arbitrary 
basis,  there  is  no  through  tarift"  published  from  the  Missouri  River  to 
the  seaboard. 

Commissioner  Prouty.  There  are  tariifs  published  from  the  Missis- 
sipi)i  River  to  the  seaboard. 

Mr.  Whitney.  We  are  the  originating  line  in  that  case. 

Commissioner  Prouty.  Don't  you  participate  in  shipments  of  wheat 
and  flour  which  go  from  St.  Louis  for  export  ou  an  export  rate? 

Mr.  Whitney.  We  are  the  originating  line  and  we  don't  issue  a 
tariff  to  cover  it. 

Commissioner  Prouty.  Don't  you  concur  in  the  published  tariff? 

Mr.  Whitney.  There  is  no  tariff. 

Commissioner  Prouty.  Is  there  no  tariff  from  St.  Louis  to  New  York 
on  export  flour  and  export  wheat? 

Mr.  Whitney.  No;  we  have  none. 

Commissioner  Prouty.  Have  other  lines  any? 

Mr.  Whitney.  Not  that  I  know  of. 

Commissioner  Prouty.  Is  there  any  such  tariff  from  Chicago? 

Mr.  Whitney.  I  could  not  say. 

Commissioner  Prouty.  What  is  the  domestic  rate  on  wheat  from  St. 
Louis  to  New  York  at  the  present  time? 

Mr.  Whitney.  It  is  116  per  cent — 21  cents;  116  per  cent  of  17  cents. 

Commissioner  Prouty.  Now  is  there  not  an  export  rate? 

Mr.  Whitney.  Not  now  there  is  not. 

Commissioner  Prouty.  Is  there  an  export  rate  to  Baltimore? 

Mr.  Whitney.  We  do  not  handle  any  Baltimore  business.  I  could 
not  tell  you. 

Commissioner  FiFER.  He  is  speaking  of  his  own  road. 

Commissioner  Prouty.  I  understand;  but  1  ask  whether  he  knows 
there  is  a  published  export  rate  to  Baltimore? 

Mr.  Whitney.  I  do  not  know. 

Commissioner  Prouty.  Has  there  been  during  the  last  summer? 

Mr.  Whitney.  I  do  not  think  so. 

Commissioner  Prouty.  Do  you  participate  in  a  through  rate  from 
Kansas  City  to  a  foreign  port,  like  London  and  Liverpool? 

Mr.  Whitney.  Yes,  sir. 

Commissioner  Prouty.  These  provisions  all  move  on  a  through  rate? 

Mr.  Whitney.  Yes,  sir. 

Commissioner  Prouty.  How  is  that  through  rate  made? 

Mr.  Whitney.  It  is  established  there  at  Kansas  City  in  connection 
with  whatever  they  can  get,  in  connection  with  the  ocean  rate. 

Commissioner  Prouty.  Who  established  that  rate? 

Mr.  Whitney.  By  the  combination  with  whatever  rates  you  can  get. 

Commissioner  Prouty.  What  has  the  agent  of  your  line  to  do  with 
establishing  that  rate? 

Mr.  Whitney.  If  we  could  get  a  very  low  ocean  rate  from  New  York, 
in  connection  with  our  tariff  rate  and  some  other  fellow  could  not  get 
as  low  a  rate  through  his  port  as  ours,  he  would  have  to  shrink  his  pro- 
portion to  the  seaboard  to  meet  our  through  rate. 

Commissioner  Prouty.  You  are  not  the  originating  line  in  Kansas 
City? 

Mr.  Whitney.  No,  sir. 


302  APPENDIX   G. 

Commissioner  Prottty.  You  have  some  connection  which  originates 
the  business  there? 

Mr.  Whitney.  Yes,  sir. 

Commissioner  Prouty.  In  case  a  shipment  is  to  be  made  over  your 
line  from  Kansas  City,  who  fixes  the  route  by  which  it  is  to  go? 

Mr.  Whitney.  At  the  combination  of  the  rate  from  Kansas  City  to 
East  St.  Louis. 

Commissioner  Prouty.  Do  I  understand  by  that  that  a  line  that 
carries  up  to  East  St.  Louis  says  "I  will  take  so  much  to  East  St.  Louis" 
and  you  say  "I  will  take  so  much  to  Toledo?" 

Mr.  Whitney.  No;  the  tariff  rate  from  Kansas  City  to  East  St. 
Louis  plus  the  tariff  rate  from  East  St.  Louis  to  New  York  plus  what- 
ever ocean  rate  we  canget,  and,  as  I  should  say,  if  we  should  be  low 
enough,  that  establishes  the  rate.  Now,  the  other  fellow  in  meeting 
that  competition,  if  his  ocean  rate  is  higher  and  he  can  not  take  advan- 
tage of  that  ocean  rate  tliat  we  have  must  shrink  his  proportion  to 
meet  it  to  the  seaboard. 

Commissioner  Prouty.  You  are  talking  about  the  tariff".  I  am  talk- 
ing about  when  it  was  the  tariff  tliat  the  other  fellow  had  was  less. 
That  is  something  else.  I  want  to  know  in  that  case  who  makes  the 
rate  over  your  line. 

Mr.  Whitney.  That  other  fellow  makes  it  for  us. 

Commissioner  Prouty.  Who  says  that  you  will  accept  that  rate? 
Who  determines  that  you  will  accept  or  take  business  at  that  reduced 
rate? 

Mr.  Whitney.  We  determine  it. 

Commissioner  Prouty.  Does  your  line  determine  it,  or  the  line  up 
to  East  St.  Louis,  or  your  connection  east  of  Toledo  determine  it? 

Mr.  Whitney.  When  a  line  makes  a  rate  that  is  a  legitimate  rate, 
the  eastern  line  simply  accepts  it. 

Commissioner  Prouty.  Have  you  authority  to  make  a  rate  from 
East  St.  Louis  to  New  York  over  your  eastern  connection  without  con- 
sulting them ;  that  is,  make  a  rate  that  is  less  than  the  tariff"  rate? 

Mr.  Whitney.  No  and  yes.  We  have  authority  where  conditions 
are  plain  that  rates  are  so  and  so;  we  have  authority  to  meet  it,  of 
course,  but  we  would  not  have  authority  from  an  Eastern  line  to  make 
any  rate  that  we  saw  fit. 

Commissioner  Prouty.  You  have  authority  to  meet  conditions? 

Mr.  Whitney.  That  is,  known  conditions. 

Commissioner  Prouty.  How  much  of  a  cut  do  you  have  authority  to 
make  between  East  St.  Louis  and  New  York  in  order  to  meet  couditionst 

Mr.  Whitney.  It  is  not  handled  in  that  way.  We  are  not  advised 
that  we  can  cut  so  much. 

Con  missioner  Prouty.  You  are  advised  to  get  the  business? 

Mr.  Whitney.  It  is  all  business,  of  course. 

Commissioner  Prouty.  And  you  make  whatever  rates  are  necessary 
to  get  business? 

Mr.  Whitney.  That  is,  if  we  want  it.  Occasionally  we  do  not  make 
it  because  we  do  not  want  it  at  the  rates  made  through  some  other 
gateways. 

Commissioner  Prouty.  You  told  us  in  your  direct  examination  that 
the  difficulty  in  maintaining  rates  between  Kansas  City  and  New  York 
was  the  rate  through  Chicago ;  that  you  had  to  make  a  low  rate  because 
the  lines  through  Chicago  were  making  it? 

Mr.  Whitney.  Yes,  sir;  that  is  the  opinion  of  the  St.  Louis  lines. 
That  is  reversed. 


APPENDIX    G.  303 

• 

Commissioner  Prouty.  How  about  the  Chicago  rate! 

Mr.  Whitney.  The  ocean  competition  is  continual. 

Commissioner  Prouty.  Do  you  say  that  you  do  not  carry  any 
(hiinestic  business  to  New  York  at  less  than  the  tariff  rate? 

Mr.  Whitney.  I  did  not  say  that. 

Commissioner  Prouty.  What  is  the  form  of  the  advice  that  you  give 
your  auditor  when  you  tell  him  that  a  certain  rate  shall  be  made,  and 
he  is  to  make  a  rebate  in  a  certain  amount? 

;\Ir.  Whitney.  If  I  should  say  to  him  that  the  current  rate  until 
further  notice  is  29  cents,  and  give  him  the  date  that  it  goes  into  effect, 
and  then  later  on  advise  him  when  it  is  canceled,  he  will  protect  any 
rate  during  the  period  named. 

Commissioner  Prouty.  That  is  on  domestic? 

Mr.  Whitney,  That  is  about  export. 

Commissioner  Prouty.  How  about  domestic? 

Mr.  Whitney.  I  could  not  tell  you  about  that  now. 

Commissioner  Prouty.  Could  you  tell  us  what  form  of  advice  you 
give  your  auditor  about  it? 

Mr.  Whitney.  If  we  had  anything  of  that  kind,  it  would  be  handled 
the  same  way,  whether  domestic  or  export. 

Commissioner  Prouty.  The  auditor  does  not  inquire  whether  it  is 
export  or  domestic? 

Mr.  Whitney.  It  is  not  a  part  of  his  duties  to  inquire. 

Commissioner  Prouty.  If  he  is  satisfied  that  the  business  has  been 
handled,  he  does  not  inquire?  He  does  not  know  whether  it  is  export 
or  domestic? 

Mr.  Whltney.  The  through  bill  of  lading  is  evidence  of  export. 

Commissioner  Prouty.  Do  you  advise  him  that  he  is  to  apply  that 
rebate  only  to  export? 

Mr.  Whitney.  Oh,  yes ;  if  we  had  any  domestic,  we  would  say  it  was 
domestic,  I  suppose. 

Commissioner  Prouty.  You  say  you  put  this  rate  in  effect,  and  it 
continues  in  effect  about  how  long? 

Mr.  Whitney.  If  we  should  advise  him  on  such  a  date  that  the  rate 
was  29  cents,  he  would  pass  claims  until  I  told  him  it  was  different. 

Commissioner  Prouty.  About  how  long  do  those  periods  run? 

Mr.  Whitney.  You  can  not  tell  anything  about  that.  I'liey  are 
fluctuating  all  the  time. 

Commissioner  Prouty.  Tell  us  about  how  long  the  rate  from  St. 
Louis  to  >  ew  York  was  in  effect. 

Mr.  Whitney.  I  think  that  rate  was  fully  maintained  from  the  time 
it  went  into  effect — from  along  about  the  1st  of  August  up  to  the  first 
of  the  year. 

Commissioner  Prouty.  Five  months? 

Mr.  Whitney.  Yes,  sir. 

Commissioner  Prouty.  Don't  you  understand  that  ocean  rates  fluc- 
tuated during  that  period? 

Mr.  Whitney,  I  say  that  was  the  lowest.  Occasionally  we  would 
not  want  to  make  them.  If  they  get  below  that,  we  drop  out.  There 
are  times  when  we  can  not  meet  conditions,  or  we  do  not  care  to. 

Commissioner  Prouty.  Could  you  furnish  the  Commission  a  state- 
ment showing  the  amount  of  business  you  carried  for  export  and  domes- 
tic between  July  1  and  January  1,  and  the  rate  at  which  it  was  carried? 

Mr.  Whitney.  Oh,  yes;  that  is  a  matter  of  record. 

Commissioner  Prouty.  That  is  all. 


30-1  APPENDIX    Q. 

Commissioner  FiFER..  Is  there  any  chance  that  goods  carried  for 
export  are  used  in  the  domestic  markets  at  the  seaboard? 

Mr.  Whitney.  Ko;  it  is  handled  on  an  export  bill  of  lading. 

Commissioner  FiFER.  You  think  that  could  not  happen? 

Mr.  Whitney.  I  am  sure  it  could  not.  It  could  not  with  us,  because 
it  is  sent  right  to  a  pier,  where  it  is  lightered  to  the  steamship,  if  it  has 
to  be  lightered,  or  taken  to  the  pier  where  the  steamship  is  docked. 
It  would  not  be  with  our  consent.  After  it  passes  out  of  our  posses- 
sion— that  through  bill  of  lading — we  can  not  control  it,  but  I  do  not 
know  of  any  case  where  it  was  used  that  way. 

Commissioner  Prottty\  Do  you  have  any  conference  with  your  West- 
ern connections  from  Kansas  City  ui>  to  East  St.  Louis  as  to  what  the 
rate  shall  be? 

Mr.  Whitney.  I  suppose  the  people  on  the  Missouri  River — I  sup- 
pose rates  are  talked  over  there. 

Commissioner  Prouty.  Your  man  in  Kansas  City  advises  you  that 
in  order  to  get  the  business  he  has  to  make  a  certain  rate? 

Mr.  Whitney.  It  virtually  amounts  to  that;  yes. 

Commissioner  Prouty.  Does  he  advise  you  how  much  of  a  cut  the 
carrier  up  to  the  Mississippi  Kiver  will  make? 

Mr.  Whitney.  Ino  and  yes.  It  is  divided  between  the  rivers.  The 
subdivisions  of  that  amount  would  not  cut  any  figure  in  the  through 
rate.  When  the  through  rate  is  established,  that  ends  it.  The  question 
as  to  how  it  is  divided  does  not  bear  ou  the  question  at  all,  as  I  under- 
stand it. 

Commissioner  Profty.  It  does  on  the  question  of  who  gets  the  money 
and  who  pays  the  rebate. 

Mr.  Whitney.  I  shou.d  not  think  it  made  any  difference  whether  it 
came  from  one  line  or  another.  If  there  is  a  certain  shrinkage,  I  should 
not  think  it  would  make  any  difference  where  it  came  from. 

Commissioner  Clements.  You  can  furnish  a  statement  showing  the 
amounts  collected  on  all  shipments  on  these  particular  goods  for  the  last 
calendar  year  ? 

Mr.  Whitney.  Oh,  yes ;  it  is  a  mere  matter  of  record  in  the  auditor's 
office. 

Commissioner  Clements.  Showing  how  much  was  carried  and  what 
the  rate  was  for  export  and  what  for  domestic? 

Mr.  Whitney.  I  can  tell  you  all  about  it. 

Commissioner  Clements.  What  the  published  rate  and  actual  rate 
was  and  what  rebate  was  paid  back? 

Mr.  Whitney.  Tell  you  all  about  it. 

Commissioner  Clements.  Can't  you  add  to  that  statement,  showing 
what  other  carriers  participated  with  you  in  that  shrinkage,  and  how 
much  they  shrunk  their  rates? 

Mr.  Whitney.  I  suppose  it  is  a  matter  of  bookkeeping.  I  can  not 
speak  for  our  auditing  department. 

Commissioner  Clements.  It  is  adjusted  in  some  way  and  a  record 
kept.  W^e  would  like  to  see  it  all  the  way  through — how  much  the 
shrinkage  was  and  how  much  each  road  helped  to  make  it.  You  can 
furnish  that  statement  for  the  calendar  year  on  these  products? 

Mr.  Whitney'.  Yes,  sir. 

Commissioner  Clements.  And  you  can  show  in  columns  the  amount 
carried,  the  time  when  it  was  carried,  the  name  of  the  shipper,  and 
then  the  amount  of  rebate  paid  and  who  it  was  paid  by  besides 
yourself  ? 

Mr.  Whitney.  Yes,  sir. 


APPENDIX    G. 


305 


Commissioner  Prouty.  On  a  throup:li  shijimeut  from  Kansas  City, 
is  the  rebate  all  paid  in  one  lump,  or  part  by  the  line  from  the  Missouri 
Kiver  up  to  St.  Louis,  and  the  lines  east  of  the  Mississippi  liiver  the 
other  part  of  it? 

Mr.  Whitney.  There  is  no  rule  covering  that.  It  might  be  some- 
time that  the  line  west  of  the  river  paid  ir,  and  it  might  be  another  time 
it  would  be  paid  by  the  line  east  of  the  river.  There  would  be  a  charge 
between  the  two  companies.    It  is  a  mere  matter  of  detail. 

The  Chairman.  I  infer  from  your  testimony  that  your  line  has 
iiabitually  participated  in  export  shipments  of  dressed  meats  and  pack- 
ing-house products  originating  at  Kansas  City  and  carried  at  less  than 
the  published  tariff? 

Mr.  Whitney.  Did  you  say  largely? 

The  Chairman.  Habitually. 

Mr.  Whitney.  I  say  we  handle  them  occasionally.  We  do  not  have 
a  continual  run  of  it. 

The  Ohairbian.  More  or  less  frequently? 

Mr.  Whitni; Y.  Yes,  sir ;  but  we  have  had  no  fresh  meat  from  Kansas 
City  since  the  1st  of  June. 

The  Chairman.  So  your  participation  in  that  traffic  has  been  con- 
fined to  packing  house  products? 

Mr.  Whitney.  Provisions. 

The  Chairman.  You  have  an  agent  at  Kansas  City? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Will  you  kfndly  explain  how  he  would  arrange  with 
some  particular  shipper  for  traffic  at  a  given  time,  on  a  given  date? 
What  is  his  method? 

Mr.  Whi'iney.  lie  would  ascertain  from  the  different  steamship 
lines — he  would  first  have  to  know  what  was  going  and  where  it  was 
going  to.  He  would  be  asked  to  make  a  quotation  on  a  certain 
shipment. 

The  Chairman.  By  whom? 

Mr.  Whitney.  By  the  party  who  would  have  the  business  to  move. 
The  shipper  would  ask  him  to  give  him  a  quotation. 

The  Chairman.  Would  the  shipper  come  to  him  or  would  he  go  to 
the  shipi)er? 

Mr.  Whitney,  If  he  was  active  he  would  go  to  the  shipper. 

The  Chairman.  In  some  way  your  agent  in  Kansas  City  and  the 
shipper  of  provisions  meet  together? 

Mr.  Whitney'.  No;  he  asks  us  for  a  quotation  and  we  give  it,  unless 
you  call  that  getting  togetiier.  He  will  make  that  quotation  if  he  wants 
to  get  the  business.     That  is  all  there  is  to  it. 

The  Chairman.  They  come  in  con  tact;  they  have  a  personal  interview? 

Mr.  Whitney.  Ko,  sir;  not  necessarily.  The  business  is  done  by 
phone,  because  the  packing  houses  are  located  way  out  at  the  edge  of 
town.     It  is  done  generally  by  phone. 

The  Chairman.  He  says  there  is  a  certain  amount  of  traffic  ready 
to  move? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  he  names  to  that  shipper  a  rate  at  which  your 
line  will  carry  it? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  that  proposition  may  or  may  not  be  accepted  I 

Mr.  Whitney.  That  is  it. 

The  Chairman.  If  the  proposition  is  rejected  he  may  make  another, 
still  lower? 

741a— 05 20 


306  APPENDIX    G. 

Mr.  Whitney.  No;  tluit  ends  it,  because  he  has  made  the  best  he 
can  make,  aud  that  settles  it. 

The  Chairman.  He  is  sui)i)osed  to  know  the  best  rate  that  he  can 
giiiiraiitee  from  Kansas  City  to  the  foreign  destination  over  your  line? 

j\I  !•.  Whitney.  Yes,  sir. 

The  Chaiiiman.  And  when  he  comes  to  make  the  arranoemcut  witli 
the  sliijjper  lie  names  at  the  outset  the  lowest  rate  he  can  make  on  the 
tral'lic? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  ii"  that  is  accepted,  the  traffic  is  delivered  at 
Kansas  City  to  some  line  which  in  turn  gives  it  to  you  at  East  St. 
Louis  f 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Do  you  have  any  particular  connection  between 
Kansas  City  and  East  St.  Louis,  or  do  you  get  that  traffic  from  all 
.lines? 

Mr.  Whitney.  Over  all  lines  except  the  Wabash.  Tliere  is  not  a 
very  free  intercliange  with  the  Wabash. 

The  CHATRAiAN.  What  did  you  meau  that  traffic  would  be  billed  in 
such  a  (!ase  at  the  tariff  rate? 

Mr.  Whitnev.  I  stated  that  probably  since  about  the  UOth  of  July 
or  21st  of  July  it  has  been  billed  flat. 

The  Chairman.  That  is,  billed  at  the  actual  rate  charged? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  That  is  since  about  what  time? 

Mr.  Whitney.  I  think  about  July  -51  we  gave  instructions  of  that 
kind,  or  August  1,  or  somewhoie  in  there. 

The  Chairman.  And  since  that  time  has  all  of  the  export  traffic  in 
which  you  have  i)aiticipated  been  carried  at  tbe  actual  rates  named  in 
ths  bills  of  lading  f      . 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Prior  to  that  time  was  there  a  published  tariff  for 
export? 

Sir  Whitney.  For  export,  do.    We  have  no  tarifi  on  export. 

The  Chairman.  Then,  again,  what  did  you  mean  by  saying  that  the 
traffic  was  billed  at  the  tariff  rate,  and  then  afterwards  a  claim  was 
made  for  the  difference  between  that  rate  and  the  rate  agreed  upon? 

Mr.  Whitney.  That  was  prior  to  the  time  I  speak  of. 
^  The  Chairman.  So  at  some  time  there  was  a  tariff  rate? 

Mr.  Whitney.  The  same  tariff  that  is  in  effect  now  has  been  in 
efle(;t  for  a  year.  The  35-cent  rate  from  East  St.  Louis  to  New  York 
has  been  in  for  a  year. 

The  Ciiaikman.  Is  that  the  domestic  tariff'? 

Mr.  Whitney.  That  is  the  domestic  and  export  rate,  unless  there  is 
a  special  export  rate. 

The  Chair:man.  Then,  so  far  as  published  tariffs  are  concerned,  there 
is  no  dilferen(;e  between  export  and  domestic? 

Mr.  Whitney.  Not  with  us. 

The  Chairman.  Has  there  been  at  any  time? 

Mr.  Whitney.  Not  since  1  have  been  with  the  company. 

The  Chairman.  Now,  going  back  to  the  period  prior  to  the  time 
when  you  billed  at  a  flat  rate  and  when  some  rebate  arrangement  was 
made,  I  understand  you  to  say  that  the  traffic  would  be  billed  at  the 
published  tariff  rate,  which  would  be  the  domestic  rate  from  Kansas 
City  to  New  York,  and  then  a  claim  would  be  made  for  the  difference 


APPENDIX  Q.  307 

between  that  rate  and  the  rate  which  had  been  actually  agreed  upon 
for  that  shipment? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  By  whom  would  that  claim  be  made? 

Mr.  Whitney.  Well,  there  are  two  ways  of  handling  that.  For  con- 
venience it  might  be  that  the  shipper  would  pay  the  correct  rate;  that 
is,  he  would  pay  the  correct  rate,  prepay  it,  for  instance,  and  while 
billed  at  the  tariff  rate,  when  the  business  arrived  at  New  York  at  the 
tariff  rate  the  Eastern  agent  at  l^ew  York  would  apply  for  relief  for 
the  difference.  That  is  probably  the  general  way.  Then  the  export  bill 
of  lading  is  the  evidence  there,  and,  on  the  other  hand,  the  evidence 
would  be  in  the  auditor's  ofBce. 

The  Chairman.  Does  that  mean  when  the  shipper  paid  the  published 
tariff  rate  that  the  claim  for  rebate  would  be  presented  by  some  con- 
signee or  agent  at  New  York? 

Mr.  Whitney.  On  the  arrangement  I  speak  of  1 

The  Chairman.  Yes. 

Mr.  Whitney.  No;  he  is  through  with  it.  The  shipper  is  through 
with  it  then. 

The  Chairman.  In  no  case  has  the  shipper  paid  the  full  tariff'  rate? 

Mr.  Whitney.  Oh,  yes.  Then  the  other  plan  would  be  for  the 
shipper 

The  Chairman.  Let  us  stick  to  that  for  a  moment.  Take  the  case 
where  the  shipper  pays  the  full  tariff"  rate.     That  would  be  35  cents? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  From  Kansas  City  to  New  York? 

Mr.  Whitney.  From  East  St.  Louis  to  New  York. 

The  Chairman.  What  would  it  be  from  Kansas  City  to  New  York? 

Mr.  Whitney.  Fifty-three  and  one-half  cents  on  the  full  combina- 
tion of  tariff' rates. 

The  Chairman.  The  full  published  tariff"  rate  for  this  trafiic  would 
be  53i  cents  from  Kansas  City  to  New  York? 

Mr."  Whitney.  Yes,  sir. 

The  Chairman.  Whether  for  export  or  domestic  use? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Now,  were  there  cases  in  which  the  Kansas  City 
shipjier  paid  the  53i  cents  in  advance,  at  the  time  of  shipment? 

Mr.  Whitney.  I  could  not  answer  that  for  the  business  clear 
through  from  Kansas  City,  because  the  tariffs  from  Kansas  City  to 
East  St.  Louis  would  have  nothing  to  do  with  that.  It  would  be  a  pie- 
paid  shipment,  and  we  would  not  be  interested  in  the  back  charges  up 
to  us.    It  would  come  to  us  prepaid. 

The  Chairman.  You  may  not  know  in  a  particular  instance,  but  do 
you  know  generally? 

Mr.  Whitney.  We  would  know  at  the  time  in  what  way  it  had  been 
settled  at  Kansas  City.  That  would  only  develop  several  months 
afterwards,  when  the  claim  was  j)resented.  If  the  claim  was  not  pre- 
sented, it  would  follow  that  they  were  not. 

The  Chairman.  I  assume  there  were  cases  where  the  full  tariff"  rate 
was  paid  at  Kansas  City. 

Mr.  Whitney.  No;  I  am  speaking  now  of  the  proportion.  So  far 
as  we  are  concerned,  I  could  not  tell  you  at  Kansas  City  whether  they 
are  ever  paid  in  full  or  not. 

The  Chairman.  Does  it  come  to  this :  That  sometimes  that  claim  is 
made  by  the  ISlansas  City  shipper  and  sometimes  by  an  agent  or  con- 
signee at  New  York  ? 


808  APPENDIX   G. 

Mr.  Whitney.  Yes,  sir;  in  one  case  it  would  be  for  the  equalization 
of  the  through  export  rate,  paid  to  the  shipper  to  equalize  the  rate 
made  by  another  route.  The  other  would  be  the  same  rate  settled  for 
the  relief  of  the  agent  at  the  seaboard. 

The  Chairman.  This  53J  cents  tariff  rate  from  Kansas  City  to  New 
York  is  divided  between  the  different  carriers,  when  you  j)articipate 
in  traflic,  in  certain  agreed  proportions'? 

Mr.  Whitney.  It  is  an  arbitrary  division  between  the  rivers.  The 
rate  from  Kansas  City  to  the  Mississippi  is  not  prorated  on  a  mileage 
basis  like  it  is  east  of  the  Mississippi  River. 

The  Chairman.  There  is  an  arbitrary  from  Kansas  City  to  East  St. 
Louis'? 

Mr.  Whitney.  That  is  the  way  the  rate  is  made. 

The  Chairman.  Does  the  prorate  begin  at  East  St.  Louis  1 

Mr.  Whitney.  The  proportion  of  the  rate  east  of  St.  Louis  is  divided 
on  prorate  basis,  based  on  the  mileage  of  each  line. 

The  Chairman.  When  a  rebate  was  i^aid,  was  that  divided  between 
the  different  carriers,  or  shared  by  the  different  carriers  in  the  same 
l»roportion  in  which  they  share  in  the  tariff  rate? 

Mr.  Whitney.  That  is  pretty  hard  to  tell  here,  because  it  would 
dej)end 

The  Chairman.  How  is  it  so  far  as  your  line  is  concerned  ? 

Mr.  Whitney.  I  am  speaking  of  it.  There  is  no  ironclad  rule  of 
that  kind.  As  to  the  question  of  dividing  the  shrinkage,  that  is  merely 
a  matter  of  agreement  from  time  to  time;  but,  at  any  rate,  it  would 
not  be  on  a  prorate  basis,  as  I  say. 

The  Chairman.  Does  it  come  to  this:  That  the  shrinkage  or  conces- 
sion, whatever  name  you  may  call  it  by,  would  not  regularly  or  ordinarily 
be  borne  by  the  different  carriers  in  the  same  proportion  in  which  they 
share  in  the  full  tariff  rate*? 

Mr.  Whitney.  It  would  be  about  that  way.  It  would  amount  to 
l)robably  the  same  thing. 

The  Chairman.  It  would  be  approximately  the  same  thing? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Now,  when  a  claim  was  presented  to  your  company, 
would  it  be  for  your  share  of  the  concession  or  for  the  entire  concession  *? 

Mr.  Whitney.  Well,  it  is  both  ways,  I  imagine.  It  depends  entirely 
on  the  arrangement  at  the  time. 

The  Chairman.  Then  some  arrangement  is  made  by  your  repre- 
sentative with  the  shipper  in  reference  to  the  presentation  of  this  claim 
for  rebate? 

Mr.  Whitney.  It  might  be  that  way.    That  is  right. 

The  Chairman.  What  other  way  would  it  be? 

Mr.  Whitney.  Well,  it  would  be  either  the  whole  presented  to  us 
and  we  collect  from  all  the  lines,  or  it  might  be  presented  separately. 
That  would  only  be  a  matter  of  detail.  After  the  rate  is  made  it  don't 
make  any  difference  how  it  is  taken  care  of,  as  I  can  see. 

The  Chairman.  When  your  agent  can  secure  a  consignment  of  this 
kind  of  traffic  from  Kansas  City  at  a  rate  agreed  upon  with  the  shipiier, 
does  the  arrangement  include  the  presentation  of  the  claim,  by  whom 
and  to  whom  for  any  concession? 

Mr.  Whitney.  No  ;  I  think  not. 

The  Chairman.  If  the  claim  is  to  be  made  by  the  shipper,  how  does 
lie  know? 

Mr.  Whttney.  He  don't  care  wliere  it  comes  from.  We  have  made 
him  the  rate,  and  we  wiU  be  responsible  for  that  ratej  of  course. 


APPENDIX   O.  309 

The  Chairman.  If  you  made  him  the  rate,  he  would  hold  you  respon- 
sible for  that  rate  ? 

Mr.  Whitney.  Yes,  sir. 

Commissioner  Fifee.  Is  that  true  of  Liverpool  or  other  foreign 
destinations? 

Mr.  Whitney.  The  shrinkage  is  up  to  the  Atlantic  seaboard. 

The  Chairman.  He  must  know  at  some  time  whether  he  is  to  present 
his  claim  to  your  company  or  to  somebody  else. 

Mr.  Whitney.  He  would  i^reseut  them  to  our  agent  at  Kansas  City. 

The  Chairman.  The  claim  would  be  made  out  at  Kansas  City  in  such 
case  by  tbe  shipper  at  Kansas  City,  and  delivered  to  your  agent  at  that 
place? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  your  agent  would  turn  the  claim  over  to  the 
auditing  department? 

Mr.  Whitney.  Yes,  sir;  turn  it  over  to  the  auditing  department  with 
a  memorandum  of  the  arrangement  for  taking  care  of  the  shrinkage. 

The  Chairman.  That  arrangement  would  c<niespond  with  the  rate 
agreed  upon,  would  it  not? 

Mr.  Whitney.  What  do  you  mean  ? 

The  Chairman.  What  was  the  largest  concession  from  the  tariff"  rate 
at  which  traffic  was  carried  over  your  line  during  the  last  year? 

Mr.  Whitney.  Six  cents.     We  are  speaking  now  of  provisions. 

The  Chairman.  The  tariff"  rate  is  53^  cents? 

Mr.  Whitney.  Thirty-five  cents  from  East  St.  Louis  and  18i  between 
the  Missouri  River  and  the  Mississippi  liiver. 

The  Chairman.  And  the  lowest  rate  at  which  that  traffic  has  actu- 
ally moved,  to  your  knowledge,  over  your  line  is  47^  cents? 

Mr.  Whitney.  No;  I  do  not  think  you  have  the  right  idea.  I  say 
from  East  St.  Louis  to  the  Atlantic  seaboard  (>  cents  is  as  much  as  we 
have  ever  shrunk  the  rate.  If  it  was  necessary  to  shrink  it  more  than 
that,  we  would  not  want  it. 

The  Chairman.  The  rate  from  East  St.  Louis  to  New  York  was  35 
cents? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  That  means  18|  cents  from  Kansas  City  to  St.  Louis? 

Mr.  Whitney.  It  w^mld  if  there  was  nothing  off  there. 

The  Chairman.  So,  then,  you  say  <»  cents  is  the  largest  concession 
in  which  you  have  participated;  you  mean  G  cents  off'  of  the  rate  of  35 
cents  from  East  St.  Louis  to  the  seaboard? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  But  it  does  not  follow  that  the  traffic  paid  18^  cents 
from  Kansas  City  to  East  St.  Louis? 

Mr.  Whitney.  No. 

The  Chairman.  And  probably  does  not  in  many  cases t 

Mr.  Whitney.  In  many  cases. 

The  Chairman.  In  such  a  case  as  that  would  there  be  two  claims 
made,  one  against  the  carrier  to  East  St.  Louis  and  another  against 
your  company? 

Mr.  Whitney.  No;  the  claim  would  be  presented  to  our  agent  at 
Kansas  City. 

The  Chairman.  And  that  would  be  for  the  entire  concession? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  what  would  he  do?  It  would  be  just  one  claim 
made  out  by  one  shipper  for  the  difference  between  the  rate  agreed  on 
and  the  rate  of  35  cents'? 


310  APPENDIX    O. 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  What  would  he  do  with  it? 

Mr.  Whitney.  Prepare  a  statement  and  send  it  to  the  general 
auditor. 

The  Chairman.  Would  he  call  on  them  to  pay  the  whole? 

Mr.  Whitney.  It  might  be.  There  is  a  system  that  would  make  it 
possible  to  do  that. 

The  Chairman.  But  your  company  would  only  pay  6  cents  out  of 
that? 

Mr.  Whitney.  Our  comi>any  and  its  connections. 

The  Chairman.  Your  connections  east? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  if  any  greater  concession  was  made — any 
concession  greater  than  that — it  would  be  borne  by  the  line  between 
Kansas  City  and  East  St.  Louis'? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Those  claims  are  made  in  the  name  of  the  shipper, 
I  suppose,  in  such  a  case  as  I  assume? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  when  the  claim  is  audited,  how  is  it  paid? 

Mr.  Whitney.  I  suppose  it  is  paid  by  check  or  voucher. 

The  Chairman.  And  the  records  of  your  company  show  all  those 
transactions? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Can  you  tell  approximately  what  share  of  the 
aggregate  traffic  in  provisions  from  Kansas  City  to  the  Atlantic  sea- 
board is  carried  by  your  road  ? 

Mr.  Whitney.  I  could  not  tell  you  even  approximately.  It  would 
only  be  a  guess  on  my  part. 

The  Chairman.  Do  you  not  have  some  idea  about  it? 

Mr.  Whitney.  There  is  a  record  that  will  determine  it  exact. 

The  Chairman.  Who  keeps  that  record? 

Mr,  Whitney.  I  think  there  is  a  record  kept  in  Kansas  City.  I  think 
the  chamber  of  commerce  or  some  of  those  concerns  there  keep  it. 

The  Chairman.  There  are  accessible  data  from  which  it  can  be  deter- 
mined just  what  share  each  road  carried  of  the  aggregate  traffic? 

Mr.  Whitney.  I  think  so. 

The  Chairman.  Now,  is  it  your  understanding  that  when  a  29-cent 
rate  was  made  by  your  line  from  East  St.  Louis  that  the  same  rate  was 
made  by  all  other  lines  from  East  St.  Louis  at  the  same  time? 

Mr.  Whitney.  I  could  not  say  as  to  that. 

The  Chairman.  What  is  your  understanding  of  it? 

Mr.  Whitney.  I  imagine  that  if  they  wanted  any  of  the  business  they 
would  probably  have  had  to  make  that  rate. 

The  Chairman.  You  are  able  to  tell  about  what  rates  are  received 
by  other  lines  than  your  own  from  East  St.  Louis? 

Mr.  Whitney.  We  try  to  keep  posted.    That  is  a  part  of  our  business. 

The  Chairman.  Have  you  reason  to  believe  that  traffic  of  this 
description  has  been  carried  through  East  St.  Louis  at  less  than  29 
cents? 

Mr.  Whitney.  I  do  not  believe  there  has. 

The  Chairman.  You  maintained  a  29-cent  rate  on  that,  and  there 
has  been  no  lower  rate  than  29  cents  for  the  last  six  months? 

Mr.  Whitney.  All  the  information  we  have  would  show  that  there 
has  not  been. 

The  Chairman.  What  did  I  understand  you  to  state  as  the  fact,  that 


APPENDIX   G.  311 

there  is  the  actual  rate  that  has  j)revailed  over  your  line  the  last  six 
months — 29  ceutsi 

Mr.  Whitney.  That  was  the  lowest. 

The  CriAiEMAN.  It  was  not  uuiformly  20  cents? 

Mr.  Whitney.  No,  sir;  it  tluftuates  every  week. 

The  Chairman.  When  it  is  29  cents  on  your  road,  do  you  understand 
that  it  is  l-'9  cents  on  other  roads  at  the  same  timei 

Mr.  Whitney.  Throuji'h  St.  Louis? 

The  Chairman.  Yes,  sir. 

Mr.  Whitney.  I  would  understand  so  if  they  handled  it.  All  lines 
do  not  handle  provisions. 

The  Chairman.  Do  you  saj^  from  such  knowledge  as  yon  have  of 
the  situation  that  practically  tiie  same  rates  prevail  on  the  same  day 
during  the  same  week  via  all  lines  from  St.  Louis  to  the  same  seaboard 
destinations  f 

Mr.  Whitney.  No:  it  is  a  question  of  finding  out.  Some  line  may 
be  a  little  late  in  getting  information  and  may  be  a  week  behind. 

The  Chairman.  Then  it  may  be  that  at  the  time  that  you  are  carry- 
ing at  29  cents  some  other  line  is  getting  MO  cents? 

Mr.  Whitney.  I  do  not  think  they  would  get  very  much  at  30. 

The  Chairman.  Some  might  be  carrying  at  28? 

Mr.  Whitney.  If  they  were  we  would  not  be  carrying  any  at  29. 

The  Chairman.  Does  it  not  then  follow  that  rates  must  have  been 
practically  the  same  at  the  same  time,  or  else  some  one  carrier  would 
get  all  the  business  at  a  particular  time? 

Mr.  Whitney.  No;  if  the  rates  are  settled  down  to  one  settled  rate 
and  it  is  discovered  that  the  rate  is  a  certain  figure,  then  each  line  is 
on  an  equal  footing. 

The  Chairman.  Was  there  a  considerable  period  during  last  year 
when  that  was  the  condition? 

Mr.  Whitney.  Along  the  first  of  the  year. 

The  Chairman.  As  to  the  29-cent  rate,  was^there  a  considerable 
period  when  all  the  roads  carried  at  29  cents? 

Mr.  Whitney.  Through  East  St.  Louis? 

The  Chairman,  Yes,  sir. 

Mr.  Whitney.  It  probably  settled  down  to  a  29-cent  rate;  that  is, 
after  the  rate  is  made  and  it  is  discovered  what  the  rate  is. 

The  Chairman.  Have  you  carried  any  provisions  at  the  full  tariff 
rate  during  1901? 

Mr.  Whitney.  Yes. 

The  Chairman.  Have  you  carried  provisions  from  East  St.  Louis, 
say,  to  New  York,  on  which  35  cents  was  actually  paid  and  retained  by 
the  carriers? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Are  you  able  to  say  what  proportion,  approximately, 
of  the  traffic  you  have  carried  paid  the  tarilf  rate  of  35  cents? 

Mr.  Whitney.  It  was  a  very  small  precentage  of  the  total,  and  it 
was  probably  along  about  the  1st  of  January  of  last  year. 

The  Chairman.  You  are  accustomed  to  indulge  in  New  Year's 
resolutions? 

Mr.  Whitney.  Yes,  sir;  we  all  swear  ofioii  New  Year's  and  begin 
again. 

The  Chairman.  Is  it  a  fact  that  from  January  1,  1901,  there  was 
a  period  when  the  tariff'  rate  was  actually  applied  by  all  the  roads? 

Mr.  Whitney.  Yes,  sir;  I  think  it  was. 

The  Chairman.  How  long  did  it  last? 


312  APPENDIX   Q. 

Mr.  Whitney,  I  tliink  it  lasted  probablj^  two  weeks. 

The  Chairman.  Did  any  traffic  move  duiiug  that  timet 

Mr.  Whitney.  Yes,  sir. 

Tlie  Chairman.  Over  your  line? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  over  other  lines? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  What  led  you,  Mr.  Whitney,  to  direct  your  agent 
to  make  a  lower  rate  than  35  cents? 

Mr.  Whitney.  I  think  it  was  the  other  way.  The  first  of  the  year, 
when  rates  tightened  up,  for  reasons  best  known  to  ourselves  we  got  a 
very  large  portion  of  the  provisions,  and  probably  the  other  lines 
thought  there  was  something  wrong,  and  of  course  they  probably  went 
aftfir  some  of  the  business. 

The  Chairman.  Confining  yourself  to  the  period  of  time  in  the  early 
part  of  last  year,  when  you  got  a  large  share  of  the  traffic  at  35  cents 

Mr.  Whitney.  I  did  not  say  a  large  share-of  it.     We  got  some  of  it. 

The  Chairman.  At  that  time,  or  for  a  short  time  after  the  1st  of 
January,  1901,  you  understand  all  of  the  roads  got  the  35  cents? 

Mr.  Whitney.  That  is,  through  St.  Louis. 

The  Chairman.  Now,  there  was  some  period  later  than  the  1st  of 
January  when  you  began  to  make  a  rate  less  than  35  cents.  Can  you 
state  when  that  was? 

Mr.  Whitney.  About  the  third  week  in  January. 

The  Chairman.  What  induced  you  to  do  it  then? 

Mr.  Whitney.  On  account  of  competition  through  Chicago. 

The  Chairman.  What  was  the  evidence  of  that  competition? 

Mr.  Whitney.  That  is  pretty  hard  to  tell  or  explain.  It  is  some- 
thing that  is  known  at  the  time.  It  is  what  we  call  an  open  secret, 
what  the  rates  are,  at  the  time,  and  our  man  out  there,  like  all  the  rest 
of  the  representatives,  knows  what  the  rate  is. 

The  Chairman.  Does  that  mean  that  your  agent  in  Kansas  City 
discovered,  about  the  20th  of  January,  1901,  that  provisions  were  moving 
by  way  of  Chicago  at  less  than  the  tariff  rate? 

Mr.  Whi'I'NEY.  That  would  be  the  inference. 

The  Chairman.  Do  you  remember  whether  that  was  the  fact? 

Mr.  Whitney.  I  would  say  that  that  was  the  reason  that  we  did 
readjust  it  at  that  time.     I  would  say  that  was  the  fact. 

Tlie  Chairman.  As  a  matter  of  fact,  you  did  readjust  it  about  that 
time? 

Mr.  Whitney.  Yes,  sir.  I  do  not  think  we  handled  any  the  third 
week.  We  handled  a  few  the  fourth  week,  but  during  the  month  of 
February  I  do  not  think  we  handled  any. 

The  Chairman.  And  since  that  time  have  you  carried  any  traffic 
which  paid  the  35  cents  tariff  rate? 

Mr.  Whitney.  I  doubt  it.    That  is,  export  traffic? 

The  Chairman.  Any  traffic. 

Mr.  Whitney.  Our  domestic — I  could  not  say  as  to  that,  but  I  think 
we  have  on  the  domestic;  in  fact,  I  know  we  have  carried  it  at  35  cents. 

The  Chairman.  Since  the  1st  of  January? 

Mr.  Whitney.  Yes,  sir;  I  kuow  we  have. 

The  Chairman.  You  have  carried  provisions  to  New  York  for  whteh 
you  got  35  cents? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  But  I  understand  you  to  say  that  was  a  small  per- 
centage. 


APPENDIX  a.         '  313 

Mr.  Whitney.  The  exj)ort  as  compared  with  the  domestic.  The 
domestic  is  a  sranll  proportion.  Very  few  domestic  provisions  were 
handled. 

The  Chairman.  Bnt  the  provisions  actually  consumed  in  the  East 
are  not  a  small  proi)ortion  of  the  total  shipments  of  provisions  out  of 
Kansas  City  and  other  Missouri  River  points,  are  they? 

Mr.  Whitney.  I  do  not  know  anything  about  that.  I  know  we  do 
not  handle  domestic  provisions  to  amount  to  anything. 

The  Chairman.  Why  not? 

Mr.  Whitney.  I  could  not  tell  you. 

Commissioner  Prouty.  Do  you  know  whether  any  other  line  does? 

Mr.  Whitney.  No;  I  could  not  tell  you  what  would  be  the  per  cent 
of  domestic  as  compared  with  export.  I  must  say  1  am  not  informed 
on  that. 

The  Chairman.  But  in  your  case  you  say  it  is  very  small? 

Mr.  Whitney.  It  is  very  small. 

The  Chairman.  I  think  I  am  warranted  in  inferring  from  your  state- 
ment that  the  amount  of  provisions  you  carried  subsequent  to  January 
1,  190 J,  for  which  you  got  35  cents  was  very  small? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  the  bulk  of  the  provision  traffic  in  which  you 
participated  during  that  year  was  carried  for  less  than  the  published 
tariff? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Well,  Mr.  Whitney,  is  it  not  a  fact  that  very  little  of 
this  traffic  has  been  carried  at  the  domestic  rate,  in  iact? 

Mr.  Whitney.  Do  you  mean  domestic  business? 

The  Chairman.  Any  kind  of  business. 

Mr.  Whitney.  Do  you  mean  domestic  business  at  the  tariff  rate? 

The  Chairman.  Yes. 

Mr.  Whitney.  I  do  not  know.  Our  information  does  not  point  that 
there  has  been  any  disturbance  in  the  domestic  rate. 

The  Chairman.  You  say  that  out  of  the  total  traffic  in  provisions 
which  you  have  carried  only  a  very  small  percentage  or  fraction  has 
paid  you  35  cents — as  to  the  entire  provision  traffic  which  you  have 
carried,  a  very  small  proportion  of  it  has  i)aid  you  35  cents? 

Mr.  Whitney.  Y'"es,  sir ;  for  the  reason  that  practically  90  per  cent 
of  the  provisions  we  carried  were  for  export. 

The  Chairman.  Is  that  probably  the  case  with  the  other  lines? 

Mr.  Whitney.  I  could  not  tell  you.  I  do  not  know  the  amount  of 
domestic  they  have  compared  with  through  export,  but  I  suppose  the 
export  with  other  lines  is  about  the  same  as  with  us. 

The  Chairman.  Y"ou  do  not  think  that  90  per  cent  of  the  provisions 
that  move  east  are  export? 

Mr.  Whitney.  I  do  not  know. 

The  Chairman.  Wliat  do  you  think? 

Mr.  Whitney.  I  would  not  ventui-e  a  suggestion  on  it. 

The  Chairman.  Is  it  not  a  fact  that  a  large  part  of  this  traffic  is 
destined  for  domestic  consumption? 

Mr.  Whitney.  I  do  not  think  so. 

The  Chairman.  It  has  not  been  carried  by  your  linef 

Mr.  Whitney.  It  has  not  been  by  our  line. 

The  Chairman.  What  reason  have  you  to  think  it  has  not  been  car- 
ried by  other  lines? 

Mr.  Whitney.  I  never  heard  anything  about  domestic  provisions. 

The  Chairman.  If  the  provisions  that  are  actually  consumed  in  the 


314  APPENDIX  a. 

East  are  carried  by  these  lines  at  tariff  rates,  what  is  the  reason  you 
do  not  get  any  of  that  traffic? 

Mr.  Whitney.  1  could  not  tell  you,  unless  it  be  that  these  other 
lines — these  stron<;er  lines,  as  we  call  tliein — have  facilities  for  reaching 
local  points.  We  Lave  access  to  Philadelpliia  and  New  York  on  au 
equal  footing  with  other  lines. 

The  Chairman.  You  could  not  take  provisions  for  interior  destina- 
tions like  Buffalo,  Eochester,  or  Albany  so  well  ? 

Mr.  Whitney.  I  do  not  think  we  could  handle  them  in  as  good  shape 
as  other  lines. 

The  Chairman.  So  at  tariff"  rates  on  that  traftic  you  would  not 
expect  to  participate  very  extensively  in  if? 

Mr.  Whitney.  No,  sir;  and  they  have  packing  houses  on  those 
tracks.  On  our  export  business  we  name  a  rate,  and  we  can  send  it  any 
route  we  see  lit.  Y"ou  can  not  do  that  with  domestic,  because  it  has  to  go 
a  certain  route.  That  may  account  for  the  fact  that  we  do  not  handle 
many  domestic  provisions. 

The  Chairman.  If  I  understand  your  statement,  it  comes  to  this. 
You  say  there  is  no  tariff' on  export  traffic  of  this  kind;  that  the  only 
published  tariff  is  the  domestic  tariff' of  35  cents;  that  down  to  some 
time  last  summer  the  provision  traffic,  so  far  as  you  participated  in  it, 
was  billed  at  the  domestic  rate  of  35  cents,  and  then  when  a  concession 
was  made  to  somebody  in  some  form,  not  exceeding  0  cents  in  any  case, 
it  was  billed  at  the  actual  rate,  and  that  you  carried  very  little  domes- 
tic traffic  which  paid  the  35  cents? 

Mr.  Whitney.  No;  I  did  not  say  that.  I  said  we  carried  very  little 
domestic  and  that  we  got  35  cents  on  domestic  bnsiness,  but  I  wonld 
not  say  positively  that  every  pound  of  it  was  carried  on  that  rate. 

If of  it  was  carried  on  that  rate.     If  there  was  any  concession 

from  that,  it  would  not  amount  to  anything  at  all. 

The  Chairman.  Since  some  time  last  summer  this  traffic  for  export 
has  been  billed  at  the  actual  rate  agreed  upon? 

Mr.  Whitney.  Y^es,  sir. 

The  Chairman.  In  point  of  fact,  does  this  rate  fluctuate  from  day  to 
day? 

Mr.  Whitney.  From  week  to  week ;  probably  every  day. 

The  Chairman.  Did  you,  during  the  season  of  1001,  participate  in 
the  movement  of  grain  for  export? 

Mr.  Whitney.  Why,  I  guess  we  had  some  wheat  from  East  St. 
Louis  to  Philadelphia. 

The  Chairman.  Not  generally  through  the  year? 

Mr.  Whitney^  No. 

The  Chairman.  You  have  not  generally  engaged  in  that  business 
during  the  year? 

Mr.  Whitney.  No. 

The  Chairman.  You  spoke  of  competition  by  the  Gulf  ports.  Is  it 
your  understanding  that  a  good  deal  of  this  provision  traffic  originating 
at  Kansas  City  leaves  the  country  by  the  Gulf  ports? 

Mr.  Whitney.  No;  I  do  not  think  there  is  any  trans- Atlantic  busi- 
ness to  amount  to  anything. 

The  Chairman.  Then  what  did  you  refer  to  when  you  spoke  of  com- 
petition by  Gulf  ports  ? 

Mr.  Whitney.  It  probably  would  if  we  did  not  control  it  through  the 
States. 

The  Chairman.  I  thought  you  made  that  statement. 

Mr.  Whitney.  We  were  talking  at  that  time  about  the  grain  and 


•  APPENDIX   O.  315, 

grain  products;  in  a  general  may  asking  how  rates  were  made  in  com- 
petition. That  is  why  1  made  that  remark  there.  It  did  not  apply 
particularly  to  provisions. 

The  Chairman.  How  is  it  that  you  do  not  carry  any  dressed  meats'? 

Mr.  Whitney.  Well,  that  is  pretty  hard  to  tell.  The  shipper  may 
not  want  to  give  it  to  us.     He  may  not  be  fixed  to  ship  by  our  line. 

The  Chairman.  You  appear  to  participate  in  the  carriage  of  provi- 
sions to  a  considerable  extent. 

Mr.  Whitney.  Well,  there  is  a  great  difference  about  dressed  beef 
as  to  time  and  service.  You  see,  it  is  a  very  valuable  product  and  per- 
ishable, and  it  is  not  shipped  like  provisions.  You  have  to  send  it  by 
established  routes;  you  can  not  change  it  around. 

The  Chairman.  The  general  fact  is  that  you  do  not  carry  dressed 
meats  to  a  great  extent  over  your  line? 

Mr.  Whitney.  No. 

The  Chairman.  Won't  you  repeat  the  points  of  departure  of  traffic 
from  your  line  and  the  Eastern  connections  which  join  with  you  in  the 
movement  of  provisions'? 

Mr.  Whitney.  Ohio  City  and  the  Erie 

The  Chairman.  Traffic  leaving  your  rails  there  would  go  east  via 
the  Erie? 

Mr.  Whitney.  Yes,  sir;  and  its  connections;  then  Continental  and 
the  Nickel  Plate  road  and  its  connections;  Toledo  and  the  Lake  Shore 
and  its  connections,  and  Toledo  with  the  Michigan  Central  and  its  con- 
nections. I  would  like  to  qualify  that  by  saying  that  we  have  not  sent 
any  provisions  lately  through  Toledo  and  the  Michigan  Central  and  the 
Lake  Shore,  but  there  is  no  special  significance  in  that.  To  Ohio  City 
and  Continental  saves  that  much  of  a  haul. 

The  Chairman.  You  go  east  by  different  carriers. 

Mr.  Whitney.  The  question  of  intermediate  routing  does  not  cut 
any  figure. 

The  Chairman.  If  the  traffic  leaves  your  rails  at  Ohio  City,  it  would 
go  from  that  point  by  the  Erie*? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  And  if  it  left  at  Continental 

Mr.  Whitney.  That  would  go  by  the  Nickel  Plate  road. 

The  Chairman.  And  at  Toledo  by  the  Lake  Shore  or  the  Michigan 
Central? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  Are  Ohio  City  and  (Continental  in  the  neighborhood 
of  Toledo? 

Mr.  Whitney.  Ohio  City  is  90  miles  from  Toledo — 90  miles  this  side 
of  Toledo. 

The  Chairman.  What  determines  that  traffic  shall  go  east  by  way 
of  the  Nickel  Plate  or  the  Lake  Shore? 

Mr.  Whitney.  We  like  to  even  up  our  interchange  with  our  connec- 
tions. 

The  Chairman.  Does  the  question  of  the  actual  rate  enter  into  that 
matter? 

Mr.  Whitney.  No,  sir. 

The  Chairman.  Not  at  all? 

Mr.  Whitney.  No,  sir.  Now,  let  me  qualify  that.  It  might  be  at 
times  that  some  Eastern  line,  for  some  reason,  would  not  care  for  export 
provisions. 

The  Chairman.  That  is  to  say,  some  Eastern  connection  might  be 
unwilling  to  join  with  you  in  carrying  at  a  29-cent  rate? 


316  APPENDIX  a.  • 

Mr,  Whitney.  No,  sir;  tLat  would  not  be  the  point,  but  that  they 
would  not  care  for  them  at  all.  Their  line  might  be  in  a  congested 
condition  and  they  would  not  want  them  at  all.  That  would  be  an 
excei)tiou  to  the  rule. 

The  Chairman.  And  it  would  not  in  A,\\y  case  be  because  the  Erie 
or  the  Nickel  Plate  would  make  a  better  rate  than  the  Michigan  Cen- 
tral, for  instance? 

Mr.  Whitkey.  No,  sir;  the  rate  is  made  at  the  point  of  shipment, 
and  that  ends  it.  There  is  no  question  of  competition  with  our  Eastern 
connections  on  that  business. 

The  Chairman,  Does  your  agent,  when  he  makes  a  through  rate  at 
Kansas  City,  determine  the  routing! 

Mr.  "Whi'J'NEY.  Yes;  unless  I  told  him  we  would  like  to  even  up  our 
interchange. 

The  Chairman.  Unless  he  has  instructions  from  you,  he  routes  that 
traffic? 

Mr.  Whitney.  Yes,  sir. 

The  Chairman.  What  considerations  control  him  in  dividing  it  up 
or  in  determining  at  which  point  it  shall  leave  your  rails? 

Mr,  Whitney.  As  this  business  all  goes  through  to  connect  with 
steamers,  these  shippers  all  have  their  ideas  as  to  what  lines  can  make 
the  best  time.  For  instance,  during  the  washouts  last  month  down 
East  the  Lehigh  Valley  could  not  handle  any.  The  shipper  would 
say,  "JDon't  handle  it  via  the  Lehigh,"  and  the  Lehigh  didn't  get  any. 
That  fluctuates.  Some  particular  line  for  the  time  could  make  better 
time  than  the  Lehigh  Valley,  and  again  the  Lehigh  Valley  could  make 
better  time  for  the  time  being.  It  is  a  continual  shifting,  the  same  as 
rates. 

Commissioner  Clements.  I  wish  you  would  put  with  your  statement 
that  you  are  to  furnish  a  copy  of  one  of  these  rebates,  showing  in  what 
form  it  is  made  and  the  entries  upon  it,  how  passed  upon,  and  how 
allowed,  and  by  what  authority  your  connections  authorize  the  pay- 
ment of  it? 

Mr.  Whitney.  I  would  say  there  is  no  prescribed  form.  You  can 
not  govern  the  shipper  as  to  how  he  shall  present  it. 

Commissioner  Clements.  As  a  matter  of  fact,  or  practically,  how 
does  he  present  it — the  claim  for  rebate? 

Mr.  Whitney.  He  would  put  in  a  bill  for  so  many  pounds  of  provi- 
sions shipped  on  a  certain  date,  and  the  rate  would  be  shown,  the  cur- 
rent rate  at  that  time,  and  we  take  that,  and  all  over  that  we  have 
charged  is  refunded. 

Commissioner  Clements.  Now,  he  puts  in  a  claim  for  $100.  He  has 
paid  the  published  rate  and  no  more.  Does  he  designate  his  claim  as 
a  rebate  or  refund? 

Mr.  Whitney.  No;  simply  on  ocean  contract  so  and  so.  It  is 
merely  a  protection  of  the  ocean  contract. 

Commissioner  Clements.  He  just  designates  the  shipment  as  a 
contract? 

Mr.  Whitney.  It  is  a  contract. 

Commissioner  Clements.  Does  he  call  it  a  rebate,  loss,  or  damage, 
or  what?  Y^ou  do  not  pay  any  claim  that  conies  into  your  office,  do 
you? 

Mr.  Whi'JNEY.  If  a  claim  comes  in  the  auditor's  office  that  is 
improper,  or  that  the  auditor  has  no  pre\ious  advice  of,  that  claim  is 
turned  dowq.. 

Commissioner  Clements.  What  do  they  call  it! 


APPENDIX   Q.  317 

Mr.  Whitney.  It  is  notLing  more  tliau  the  current  rate.  It  is  an 
overcharge  claim. 

Commissioner  Clements.  It  i)asses  through  the  office  as  an  over- 
charge claim'? 

Mr.  Whitney.  Yes,  sir. 

Commissioner  Clements.  I  wish  you  would  send  us  a  fair  sample  of 
one  of  those  claims,  indicating  everything  that  is  done  about  it  in  your 
office  or  by  anybody  connected  with  your  road;  both  by  your  road  and 
its  connections. 

Mr.  Whitney.  All  right. 

Commissioner  Prouty.  You  say  about  August  1  you  stopped  bill- 
ing at  the  tariff'  rate  and  began  billing  at  a  flat  rate.  Why  did  you  do 
that? 

Mr.  Whitney.  Our  shippers  said  that  other  lines  were  billing  at  flat 
rates,  and  upon  investigation  we  found  it  was  so  and  we  immediately 
gave  instructions  to  do  the  same  thing. 

Commissioner  Prouty.  Did  you  ascertain  why  they  were  doing  it"? 

Mr.  Whitney.  It  didn't  make  any  diflerence  whether  it  was  handled 
flat  or  the  other  way.     I  think  the  flat  billing  is  the  preferable  way. 

Conmiissioner  Proxtty.  Were  you  advised  about  that  time  that  you 
were  not  obliged  to  publish  and  adhere  to  the  export  rates? 

Mr.  Whi'iney.  No,  sir. 

Commissioner  FiFER.  You  say  the  third  week  in  January  you  con- 
cluded to  cut  the  rate  on  export  business.  Did  you  fix  a  sum  that 
would  secure  the  business? 

Mr,  WiiiTNKY.  The  first  tw6  weeks  we  handled  it  at  the  tariff'  rate. 
The  third  week  there  was  a  break.  I  do  not  know  that  we  got  any  the 
third  or  fourth  week,  but  during  February  we  did  not  handle  anything. 

Commissioner  Fifer.  During  any  time  do  you  have  a  fixed  rate  or 
carry  at  any  rate  that  will  secure  the  business? 

Mr.  Whitney.  During  the  year  the  thing  gradually  settles  down  to 
a  certain  thing.  At  the  middle  of  the  year  it  has  run  into  a  hole.  It 
is  evened  up,  and  that  becomes  the  rate. 

Commissioner  Fifer.  Is  that  by  agreement  with  other  roads  or  does 
it  just  settle  down? 

Mr.  Whitney.  No;  you  might  meet  another  freight  agent,  and  by 
discussion  it  might  be  brought  out  that  they  are  all  about  on  the  same 
level — that  the  other  St.  Louis  lines  are  about  the  same  as  ours,  and  that 
is  all  there  is  in  it. 

Mr.  Day.  Do  you  file  any  tariff's  with  the  Interstate  Commerce  Com- 
mission? 

Mr.  Whitney.  Yes,  sir;  all  of  them. 

Mr.  Day.  When  did  you  file  a  tariff  on  packing-house  products  from 
the  Mississippi  River  to  New  York? 

Mr.  Whitney.  I  suppose  it  has  been  in  effect  for  a  year. 

Mr.  Day.  Did  you  file  it  or  concur  in  the  tariff'  of  another  road? 

Mr.  Whitney.  Our  tariff. 

Mr.  Day.  Your  own? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  Do  you  know  or  are  you  aware  that  there  is  a  clause  in 
the  tariff's  filed  with  the  Interstate  Commerce  Commission  that  the 
export  rate  shall  be  made  up  by  adding  the  domestic  rate  to  the  ocean 
rate  at  the  present  time? 

Mr.  Whitney.  That  applies  on  grain,  does  it  not? 

Co«imissioner  Prouty.  It  applies  on  packinghouse  products  except 
through  Boston. 


318  APPENDIX    G. 

Mr.  Whitney.  I  munt  have  passed  that.  I  am  not  clear  on  that  point. 

Commissioner  Prouty.  Don't  your  tariff  state  that  the  export  rate 
shall  be  made  by  adding  the  domestic  rate  to  the  ocean  rate,  but  to 
Boston  li  cents  lower? 

Mr.  Whitney.  I  do  not  know  that  it  does. 

Mr.  Day.  Where  you  carried  tratfic  at  the  published  rate,  say  35 
cents,  at  the  time  you  supposed  that  was  the  going  rate,  and  the  ship- 
])er  subsequently  discovers  that  a  rival  shi])per  at  that  time  had  a 
lower  rate,  do  you  then  readjust  your  rate? 

Mr.  Whitney.  Do  you  mean  on  advice  from  the  shipper? 

Mr.  Day.  Or  when  you  ascertain  that  to  be  true.  For  example,  you 
have  taken,  say,  a  large  quantity  at  35  cents,  and  then  you  subsequently 
discover  that  at  the  time  you  took  that  another  road  was  carrying  at  a 
29-cent  rate,  or  any  rate  less  than  35  cents,  is  it  your  practice  to  refund 
down  to  that  rate? 

JNIr.  AVhitney.  If  we  wanted  the  business  we  would  meet  the  rate. 

Mr.  Day.  I  mean  as  to  past  traffic.  If  you  had  taken  traffic  at  35 
cents,  and  carried  it  through  at  35  cents,  and  it  was  discovered  that  a 
rival  line  had  carried  at  a  less  rate,  do  you  refund? 

JNIr.  Whitney.  AVe  do  not  make  it  retroactive. 

Mr.  Day.  It  is  always  done  on  agreement? 

Mr.  Whitney.  Yes,  sir. 

Mr.  Day.  That  is  all. 

Witness  excused. 

D.  T.  McCabe,  having  been  duly  sworn,  testified  as  follows: 

Mr.  Day.  Mr.  McOabe,  state  your  official  relation  to  the  Pennsyl- 
vania lines. 

Mr.  McCabe.  Freight  traffic  manager  of  the  Pennsylvania  lines 
west  of  Pittsburg. 

Mr.  Day.  The  purpose  of  this  inquiry  is  to  ascertain  the  rates  and 
conditions  under  which  packing-house  products  and  dressed  meats 
have  been  carried  during — go  back  to  July  1  of  last  year.  Take  that 
six  months.  Just  tell  the  Commission  what  has  been  the  practice  on 
the  lines  under  your  control. 

Mr.  McCabe.  With  regard  to  the  packing-house  product  rate? 

Mr,  Day.  Take  the  packing  house  rate  from  the  Missouri  River  and 
the  Mississippi  River  through  Chicago  to  the  Atlantic  seaboard. 

Mr.  McCabe.  We  make  no  effort  to  control  packing-house  freight 
from  the  Missouri  River.  We  do  not  solicit  it.  If  it  comes  to  us,  it 
comes  unsolicited  on  our  part.  We  do  solicit  and  try  to  control  packing- 
house freight  from  Chicago.  We  have  no  direct  line  of  our  own  to 
the  Mississippi  River;  we  work  through  our  connections. 

Mr.  Day.  Don't  you  have  a  line,  or  control  a  line,  which  extend  to 
St.  Louis? 

Mr.  McCabe.  No,  sir. 

Mr.  Day.  Don't  the  Panhandle  extend  to  St.  Louis? 

Mr.  McCabe.  Only  to  Indianapolis.    The  Vandalia  line  does. 

Mr.  Day.  And  that  is  an  independent  road? 

Mr.  McCabe.  That  is  a  road  in  the  hands  of  receivers. 

Mr.  Day.  You  work  over  that  line? 

Mr.  McCabe.  Yes,  sir;  over  the  Vandalia  line. 

Mr.  Day.  And  that  has  been  classed  as  a  Pennsylvania  linet 

Mr.  McCabe.  It  is  generally  recognized  as  such. 

Mr.  Day.  You  work  in  harmony  ? 

Mr.  McCabe.  Yes,  sir. 


APPENDIX  a.  319 

Mr.  Day.  In  conjunction  with  that  line  or  any  other  line  leading  up 
to  St.  Louis  have  you  participated  in  any  shrinkage  of  rates  on  pack- 
ing-house products,  whetlier  from  points  west  of  the  Mississippi  River 
or  from  the  Mississippi  River  to  tlie  Atlantic  seaboard? 

Mr.  McOAEE.-Ican  not  answer  that  definitely  as  to  the  route  via 
St.  Louis,  because  we  do  not  make  the  rates  from  St.  Louis.  They  are 
made  by  the  Vandalia  line;  but  if  they  did  make  a  rate  over  our  line 
we  would  ]>articipate  in  it. 

Mr.  Day.  If  they  did  make  a  rate  less  than  the  established  rate,  less 
than  the  rate  establislied  according  to  law,  and  shrink  it,  how  would 
you  become  aware  of  the  tact  that  the  rate  was  less  than  tariff  where 
they  took  traffic  that  you  participated  in  ? 

Mr.  McOabe.  I  suppose  possibly  through  settlements  that  might  be 
made. 

Mr.  Day.  Who  would  the  settlements  be  made  with  on  your  line? 
The  Vandalia  would  call  on  you  for  settlement? 

Mr.  McOabe.  The  Vandalia  Avould  call  on  us  for  settlement  of  our 
l)roportion. 

Mr.  Day.  Through  whose  hands  would  claims  of  that  character  pass? 

Mr.  McOabe.  They  would  pass  through  the  general  officers  of  our 
company — the  freight  office. 

Mr.  Day.   1  hrough  your  office? 

Mr.  McOabe.  Not  necessarily  through  my  office;  through  the  general 
freight  oil  ice. 

Mr.  Day.  And  the  general  freight  office  is  under  your  control? 

Mr.  McOabe.  Yes,  sir. 

Mr.  Day.  Who  in  your  general  freight  office  would  have  principal 
charge  or  control  of  matters  or  claims  of  that  character  coming  from 
the  Vandalia  line? 

Mr.  McOabe.  Mr.  Hill. 

Mr.  Day.  They  would  pass  through  Mr.  Hill? 

Mr.  McOabe.  They  would  pass  through  his  office. 

Mr.  Day.  Now,  on  the  other  branches,  just  state  whose  hands  they 
would  pass  through  ? 

Mr.  McOabe.  In  what  respect? 

Mr.  Day.  In  the  settlements  of  these  claims  coming  from  the  Van- 
dalia, where  the  Vandalia  was  the  initial  line  in  taking  packing-house 
products  to  points  east  in  which  your  line  i)articipated,  I  want  to  know 
how  those  claims  would  be  adjusted  between  your  line  and  the  Vandalia 
line. 

Mr.  McOabe.  They  would  go  from  the  general  freight  agent  to  the 
accounting  department,  and  we  would  make  proper  remittance  to  the 
Vandalia  line  for  the  proportion. 

Mr.  Day.  What  department  of  the  Vandalia  line  would  transmit 
the  claims  or  accounts  to  your  road? 

Mr.  McOabe.  I  think  their  accounting  department. 

Mr.  Day.  You  say  on  the  Sguthwest  lines  they  would  go  to  Mr.  Hill  ? 

Mr.  McOabe.  Yes,  sir. 

Mr.  Day.  Where  is  Mr.  Hill's  office? 

Mr.  McOabe.  Oolumbus. 

Mr.  Day.  And  on  the  Northern  lines? 

Mr.  McOabe.  There  would  be  no  business,  no  through  business, 
interchanged  with  the  Vandalia  line  by  the  Northern  lines. 

Mr.  Day.  Now,  when  a  concession  is  made  by  the  Vandalia,  in 
which  you  are  expected  to  participate — your  lines,  I  mean — how  would 
you  be  made  aware  of  the  fact  that  you  were  expected  to  go  into  that? 


320  APPENDIX    G. 

Mr.  McGabe.  I  might  uot  be  made  aware  of  it  at  all  except  that  1 
would  have  kiiowlcdi^e  that  rates  were  not  being  maintained,  and  that 
the  Vandalia  found  it  necessary  to  make  the  same  rates  that  competi- 
tors made. 

Mr.  Day.  Who  of  the  Vandalia  makes  those  rates?  * 

Mr.  McCabe.  Made  by  the  general  freight  agent. 

Mr.  Day.  What  is  his  name? 

Mr.  McCabe.  Mr.  Taylor. 

Mr.  Day.  Would  Mr.  Taylor  communicate  to  you  that  in  order  to 
secure  traffic  he  found  it  necessary  to  make  a  concession  f 

Mr.  McCabe.  No;  he  doesn't  inform  me  as  a  general  thing. 

Mr.  Day.  Or  your  subordinates  with  whom  you  are  in  touch? 

Mr.  jM(;Cabe.  As  a  general  rule  Mr.  Taylor  or  the  Vandalia  people 
would  know  that  any  rate  they  made  on  business  from  St.  Louis  would 
be  protected  by  us.  It  would  not  require  specific  information  to  that 
effect.     That  is  just  a  matter  of  practice — common  custom. 

Mr.  Day.  You  say  to  Chicago  you  do  not  make  rates  from  the  Mis- 
souri Kivcr,  but  you  do  make  rates  out  of  Chicago.  Take,  for  conven- 
ience of  your  memory,  the  last  six  months  of  19U1 — what  (concession,  or 
what  is  the  greatest  concession  that  your  line  established  during  that 
period  that  you  can  now  recall? 

Mr.  McUabe.  Are  you  leferiing  to  export  or  domestic? 

Mr.  Day.  Both.     Take  export  tirst. 

Mr.  McCabe.  Well,  the  recognized  rate  from  Chicago  since  the  21st 
of  July  on  export  provisions  has  been  25  cents  a  hundred.  That  rate, 
1  believe,  was  uniformly  maintained  until  i)ossibly  some  time  after  the 
1st  of  October,  when  the  rate  was  made  -2  cents,  Chicago  to  New 
York.  The  domestic  rate  is  30  cents.  We  have  not,  to  my  knowledge, 
made  any  settlements  on  domestic  provisions  since  the  21st  of  July. 

Mr.  Day.  The  rate  on  packing  house  products,  Chicago  to  New  York, 
was  30  cents? 

Mr.  McCabe.  The  published  tariff  was  30  cents — the  domestic  rate. 

Mr.  Day.  Don't  you  i^ublish — have  you  not  a  provision  in  your  tariff — 
that  the  export  traffic  shall  be  carried  at  the  domestic  rate  plus  the 
ocean  rate  at  the  present  time? 

Mr.  McCabe.  I  believe  there  is  such  a  provision. 

Mr.  Day.  Did  you  put  in  that  rate?  Did  you  make  the  rate  of  25 
ceuts  or  direct  to  have  it  put  in? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  Whom  did  you  direct? 

Mr.  INIcCabe.  Our  representatives  here  in  Chicago. 

Mr.  Day.  That  applied  only  to  traffic  from  Chicago? 

Mr.  McCabe.  Only  on  traffic  from  Chicago. 

Mr.  Day.  You  made  no  concessions  on  traffic  coming  from  the  Mis- 
souri Iviver  via  Chicago? 

Mr.  McCabe.  Yes;  I  believe  there  were  recognized  rates  from  Chi- 
cago known  as  proportional  rates  on  export  traffic  coming  from  the 
Missouri  Eiver. 

Mr.  Day.  What  rate  did  you  put  in  on  that? 

Mr.  McCabe.  I  think  the  rate  was  24  cents  from  Chicago  to  New 
York. 

Mr.  Day.  That  is,  the  division? 

Mr.  McCabe.  The  division  as  applied  on  Missouri  River  business. 

Mr.  Day.  You  mean  to  say  that  was  the  rate  you  put  in? 

Mr.  McCabe.  That  was  the  rate  we  charged. 


APPENDIX  a.  321 

Mr.  Day.  And  your  division,  if  the  published  tariff  had  been  col- 
lected, would  have  been  what — 28;^  cents"? 

Mr.  MoCabe.  In  that  neighborhood. 

Mr.  Day.  You  shrunk  it  about  4  cents? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  And  on  the  traffic  originating  here,  you  shrunk  it  first  5 
cents  and  then  7^'? 

Mr.  MoOabb.  Ultimately. 

Mr.  Day.  Taking  the  traffic  which  originated  here — take,  for  example, 
the  first  concession  that  was  made,  down  to  25  cents;  how  was  that 
traffic  billed? 

Mr.  McOabb.  Billed  at  25  cents. 

Mr.  Day.  Billed  flat? 

Mr.  McOabe.  The  through  export  shipments  covered  by  a  through 
bill  of  lading. 

Mr.  Day.  That  always  accomiianied  it? 

Mr.  McCabe.  Yes,  sir ;  that  is  the  rule. 

Mr.  Day.  Now,  was  it  done  the  same  way  in  regard  to  the  22  or  22^ 
cent  rate  when  that  rate  was  in? 

Mr.  McCabe.  I  am  not  sure  about  that. 

Mr.  Day.  How  was  it  billed  when  the  22-cent  rate  was  in? 

Mr.  McCabe.  I  am  not  sure  whether  it  was  billed  flat,  or  on  the 
.25-cent  basis. 

Mr.  Day.  You  can  ascertain  that  fact? 

Mr.  McCabe.  I  can  ascertain  that. 

Mr.  Day.  In  such  instances  where  traffic  has  been  carried  on  a  lower 
rate  than  the  established  published  rate,  and  the  billing  was  at  the 
established  rate,  how  was  the  settlement  made  for  the  difference? 

Mr.  McCabe.  Usually  by  refund. 

Mr.  Day.  Just  state  or  tell  the  Commission  what  the  form  was,  what 
procedure  you  went  through,  who  the  claim  was  presented  to  by  the 
shipper,  or  by  the  initial  or  terminal  line? 

Mr.  McCabe.  Ifour  arrangement  was  with  the  shipper  or  the  under- 
standing was  with  him,  we  recognized  the  claim  for  the  difference 
between  the  shipment  as  billed  and  the  actual  rate. 

Mr.  Day.  Who  was  it  presented  to? 

Mr.  McCabe.  To  somebody  in  the  West.  To  myself  or  one  of  our 
general  freight  agents. 

Mr.  Day.  What  would  you  do  with  it? 

Mr.  McCabe.  Put  it  in  process  of  settlement. 

Mr.  Day.  What  was  that  process  ? 

Mr.  McCabe.  Drawing  a  bill  and  approving  it,  and  sending  it  to  our 
accounting  department  to  have  it  paid. 

Mr.  Day.  To  tlie  accounting  department  in  Philadelphia  or  here? 

Mr.  McCabe.  No;  in  Pittsburg. 

Mr.  Day.  When  you  put  in  the  22-cent  rate  for  whom  did  you  make 
that? 

Mr.  McCabe.  For  everybody  who  shipped  by  it! 

Mr.  Day.  Who  availed  of  it? 

Mr.  McCabe.  Everybody  who  used  our  line. 

Mr.  Day.  Who  chiefly? 

Mr.  McCabe.  I  do  not  know  that  I  can  recall. 

Mr.  Day.  Who  did  you  in  the  first  instance  make  it  tot 

Mr.  McCabe.  We  quoted  the  rate  to  everybody. 

Mr.  Day.  How  long  did  that  22-cent  rate  remain  in! 

Mr.  McCabe.  Until  the  1st  of  January. 

741a— 05 2i 


322  APPENDIX    Q. 

Mr.  Day.  Have  any  of  those  claims  been  presented  to  you  for  refund 
on  the  152  cent  rate  ? 

Mr.  McCabe.  No,  sir. 

Mr.  Day.  When  will  they  come  in,  under  your  agreement  or  under- 
standing? 

Mr.  McOabe.  I  don't  know;  at  the  convenience  of  the  party. 

Mr.  Day.  In  any  of  these  refunds  that  have  been  made,  have  any  of 
them  been  made  on  account  of  Swift  &  Co.  ? 

Mr.  McCabe.  1  don't  know.  We  made  them  to  everybody  who  used 
our  line. 

Mr.  Day.  Who  did  you  deal  with  in  settlements  representing  Swilt 

&Co.f 

Mr.  McCabe.  I  do  not  know.    I  would  not  make  the  settlement. 

Mr.  Day.  Who  would? 

Mr.  McCabe.  I  presume  it  would  be  remitted.  The  remittance  would 
be  made  to  Swift  &  Co. 

Mr.  Day.  Who  did  you  make  the  negotiations  with,  or  make  this 
contract  with,  for  the  reduced  rate;  who  did  you  state  it  to? 

Mr.  McCabe.  I  didn't  state  it  to  anybody.  I  simply  instructed  our 
people  to  state  it.     Who  they  stated  it  to  1  do  not  know. 

Mr.  Day.  Did  you  have  any  conference  with  Mr.  Fay  in  regard  to  it? 

Mr.  McCabe.  Not  for  a  great  many  mouths. 

Mr.  Day.  Or  Mr.  Ellis? 

Mr.  McCabe.  No,  sir. 

Mr.  Day.  Or  Mr.  Frisbie? 

Mr.  McCabe.  We  are  doing  business  with  him  all  the  time.  It  is 
not  improbable  that  it  may  have  been  mentioned. 

Mr.  Day.  Did  you  carry  any  for  Hammond  &  Co.  ? 

Mr.  McCabe.  I  don't  think  we  have.  We  may  have  carried  an  occa- 
sional car,  but  I  do  not  know. 

Mr.  Day.  How  about  Cudahyf 

Mr.  McCabe.  That  I  don't  know. 

Mr.  Day.  Or  Morris — do  you  know  his  traffic  manager? 

Mr.  McCabe.  Very  well. 

Mr.  Day.  Did  you  state  it  to  Mr.  Taylor? 

Mr.  McCabe.  No,  sir;  I  didn't. 

Mr.  Day.  Has  Mr.  Taylor  presented  any  claim  to  you  for  refund? 

Mr.  McCabe.  Not  to  me.  I  do  not  know  whether  there  has  been  any 
claim  for  refund  presented  by  them  during  the  past  year  or  not. 

Mr.  Day.  Or  Mr.  Frisbie? 

Mr.  McCabe.  Whatever  arrangements  we  have  had  with  them  have 
been  provided  for. 

Mr.  Day.  I  am  trying  to  ascertain  who  the  settlements  were  made 
with. 

Mr.  McCabe.  I  don't  know,  Mr.  Day.  They  were  made  with  some 
body  representing  the  house. 

Mr.  Day.  Have  you  participated  in — have  you  carried  any  traffic  at 
a  weight  which  was  less  than  the  actual  weight  of  the  traffic? 

Mr.  McCabe.  Not  to  my  knowledge. 

Mr,  Day.  Has  your  system  participated  in  anj^  underbilling  in  regard 
to  weights  on  packing-house  products  or  dressed  meats? 

Mr.  McCabe.  Not  knowingly. 

Mr.  Day.  You  participate  in  carrying  dressed  meats? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  What  concession  was  made  in  regard  to  dressed  meats 
during  that  period? 


APPENDIX    G.  323 

Mr.  McCabe.  Three  and  one-fourth  cents. 

Mr.  Day.  Was  that  from  Chicago? 

Mr.  McCabe,  From  Chicago. 

Mr.  Day.  How  about  west  of  Cliicago'? 

Mr.  McCabe.  We  would  apply  the  rate  from  Chicago  on  business 
done  from  the  West. 

Mr.  Day.  The  same  rate? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  When  the  3;|  cents  shrinkage  was  made  out  of  the  haul 
east  of  Chicago,  what  shrinkage  was  made  out  of  the  rate  west  of 
Chicago? 

Mr.  McCabb.  I  have  no  idea.  We  did  not  deal  with  that  feature  of 
it  at  all. 

Mr.  Day.  You  didn't  know  what  the  total  concession  was  from  the 
point  of  origin  of  the  trafdc? 

Mr.  McCabe.  No,  sir. 

Mr.  Day.  Did  the  shrinkage  apply  on  domestic? 

Mr.  McCabe.  As  well  as  on  exjjort;  that  is,  the  domestic  to  the 
seaboard. 

Mr.  Day.  We  are  talking  about  the  seaboard — New  York,  Phila- 
del])hia,  Boston,  and  jjoiuts  taking  the  rates  to  those  places.  Do  you 
quote  rates  through  from  Chicago  on  i)ackiug  house  products  to  foreign 
points? 

Mr.  McCabe.  Our  representative. 

Mr.  Day.  Who  is  your  representative? 

Mr.  McCabe.  Mr.  Eorner  for  the  Fort  Wayne  and  Mr. for  the 

Panhandle. 

Mr.  Day.  Do  you  have  a  steamshii)  agent  here? 

Mr.  McCabe.  No,  sir. 

Mr.  Day.  What  Hue  of  steamers  do  you  employ! 

Mr.  McCabe.  All  lines. 

Mr.  Day.  Don't  you  have  a  line,  a  preferred  line,  a  line  to  which  you 
give  the  first  preference? 

Mr.  McCabe.  That  is  controlled  by  the  solicitation  of  the  agent  of 
the  steamship  line.  The  steamships  are  all  represented  in  Chicago 
and  they  solicit  the  business. 

Mr.  Day.  Is  there  not  a  line  of  steamships  that  you  prefer  and  which 
you  send  by  when  you  can? 

Mr.  McCabe.  We  work  freely  with  them  all. 

Mr.  Day.  I  am  asking  you  if  there  is  not  one  which  you  prefer? 

Mr.  McCabe.  I  think  we  probably  do  more  business  with  the  Inter- 
national Navigation  Company. 

Mr.  Day.  The  American  Line? 

Mr.  McCabe.  Yes,  sir ;  the  American  Line. 

Mr.  Day.  Who  issues  the  through  bills  for  that  line  heret 

Mr.  McCabe.  I  think  the  through  bills  are  issued  by  Mr,  Lawrence. 

(See  page  151.) 

Mr.  Day.  What  is  his  relation  to  your  road  ? 

Mr.  McCabe.  He  has  no  official  relation  to  us.  He  is  the  general 
western  agent  of  the  steamship  line. 

Mr.  Day,  Was  he  not  at  one  time  the  agent  of  the  Pennsylvania 
lines? 

Mr,  McCabe.  No,  sir. 

Mr,  Day.  Or  auditor? 

Mr,  McCabe.  He  was  one  of  the  auditors  of  the  Union  Line  many 
years  ago. 


824  APPENDIX   a. 

Mr.  Day.  The  fast  freight  line? 

Mr.  McCabe.  Yes,  sir;  that  was  when  it  was  the  fast  freight  line. 

Mr.  Day.  How  are  the  export  rates  made  up  where  a  through  rate  is 
made? 

Mv.  McCabe.  By  combination  of  the  inland  and  the  ocean  rate. 

Mr.  Day.  Have  you  any  information,  either  by  conversation  with 
other  officials  on  your  road,  your  auditor,  or  traffic  managers  of  the 
eastern  lines  of  your  system,  or  from  conversations  with  your  local 
men  here,  or  the  steamship  men,  that  leads  you  to  believe  that  a  low 
ocean  rate  is  quoted  by  your  route  and  adjustment  of  the  rate  subse- 
quently made  between  your  auditor  and  the  steamship  company  by 
which  a  part  of  your  rate  is  shrunk  out  and  added  to  the  ocean  rate? 

Mr.  McGabe.  I  think  that  might  be  possible. 

Mr.  Day.  Have  you  information  to  that  effect,  that  such  has  occurred, 
such  instances  have  occurred  ? 

Mr.  McCabe.  I  think  it  is  possible  that  has  occurred? 

Mr.  Day.  Has  that  not  occurred  quite  recently,  say,  in  the  year  1901  ? 

Mr,  McCabe.  I  am  unable  to  say. 

Mr.  Day.  Who,  connected  with  the  system  of  which  you  are  an 
official,  would  be  able  to  say  as  to  that! 

Mr.  McCabe.  If  any  such  adjustments  were  made,  1  think  they 
would  be  made  in  the  East  and  not  here. 

Mr.  Day.  Through  the  auditing  department? 

Mr.  McCabe.  I  presume  so. 

Mr.  Day.  Are  the  published  tariffs  maintained  now  on  packing- 
house products  ? 

Mr.  McCabe.  I  believe  so. 

Mr.  Day.  Are  you  carrying  export  trafi&c  now  on  the  domestic  rate? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  That  is  to  say,  out  of  Chicago  on  packing-house  products, 
whether  for  export  or  domestic,  you  get  30  cents  a  hundred  ? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  And  you  retain  that? 

Mr.  McCabe.  And  retain  that. 

Mr.  Day.  If  that  can  be  done  at  one  period  of  the  year,  why  can't  it 
be  continued  at  other  periods'? 

Mr.  McCabe.  Some  think  it  can. 

Mr.  Day.  Why  don't  you  do  it,  then? 

Mr.  McCabe.  Because  we  do  not  control  it.  We  are  only  one  of  the 
factors  in  it. 

Mr.  Day.  What  are  the  factors? 

Mr.  McCabe.  The  general  railroad  interests  of  all  the  roads  combined. 

Mr.  Day.  You  think  there  must  be  a  combination  in  order  to  bring 
that  about? 

Mr.  McCabe.  Not  necessarily;  no,  sir.  In  order  to  maintain  a  30- 
cent  rate  the  railroads  would  have  to  be  agreed  on  that  point;  other- 
wise the  rates — taking  our  experience  in  the  i^ast — can  not  be  main- 
tained, but  there  is  no  good  commercial  reason  why  they  should  not  be 
maintained. 

Mr.  Day.  When  this  22  cent  rate  was  put  in,  what  was  the  real  cause 
for  your  putting  that  rate  in? 

Mr.  McCabe.  Our  belief  that  others  had  made  the  rate. 

Mr.  Day.  What  evidence  did  you  have  about  that? 

Mr.  McCabe.  Only  the  evidence  that  comes  to  us  usually  in  matters 
of  that  kind — common  report,  reports  from  our  people  that  they  could 


APPENDIX   G.  325 

not  secure,  business  at  the  25  cent  basis  and  their  belief  that  at  least  a 
22-cent  rate  wtis  being  made.     You  c;iu  never  i.';ct  any  data,  of  course. 

Mr.  Day.  During'  any  period  when  there  is  a  shrinkage  either  in  the 
division  of  the  rate  on  packing-house  i)roducts  that  come  from  the  Mis- 
sissippi Kiver  or  points  West  by  way  of  Chicago — you  take  it  here,  do 
you  make  any  distinction  in  regard  to  what  carrier  you  may  receive  it 
from  as  to  wiiat  your  division  shall  be  in  the  whole  rate? 

Mr.  McCabb.  InTo. 

Mr.  Day.  You  treat  all  lines  west  of  Chicago  the  same  in  that  respect! 

Mr.  McCatje.  Yes,  sir. 

Mr.  Day.  You  carry  at  your  proportion  east  of  Chicago  the  same  for 
one  line  as  for  all  other  lines? 

Mr.  McCaee.  Yes,  sir. 

Mr.  Day.  Do  you  favor  any  packing  house 

Mr.  MoCabe.  'No,  sir. 

Mr.  Day.  I  was  going  to  specify  in  what  respect.  You  do  some 
shifting  of  cars  and  switching,  for  which  charges  are  imposed  ranging 
up  to  $2,  here  in  Chicago? 

Mr.  McCabe.  It  is  not  done  by  us.  It  is  done  by  the  stock  yards 
companies. 

Mr.  Day.  Do  you  absorb  that  or  any  part  of  that  for  any  packing- 
house comj)any  in  (^hicago? 

Mr.  McCabe.  I  am  not  sure  whether  that  charge  is  absorbed  by  the 
rate  or  not.  At  one  time  it  was  a  charge  on  the  product.  My  impres- 
sion is  that  that  charge  is  now  absorbed  by  all  the  roads. 

Mr.  Day.  By  all  the  roads  alike? 

Mr.  McCabe.  By  all  of  them. 

Mr.  Day.  Do  you  absorb  that  in  taking  packing  house  products 
from  the  packing  house  that  come  from  the  stock-yards  road? 

Mr.  McCabe.  That  is  absorbed. 

Mr.  Day.  Do  you  think  that  is  done  by  all  of  them? 

Mr.  McCabe.  It  is  done  by  all  of  them  uniformly. 

Mr.  Day.  That  is  all  I  wish  to  ask  Mr.  McCabe  now. 

Commissioner  ProUty.  You  say  that  about  the  21st  of  July  you 
began  to  bill  this  export  stuff  flat,  and  previous  to  that  time  you  billed 
it  at  the  30-cent  rate? 

Mr.  McCabe.  Yes,  sir. 

Commissioner  Prouty.  Had  you  applied  the  refund  both  to  domestic 
and  export  previous  to  that  time? 

Mr.  McCabe.  We  did  to  the  export.    1  am  not  sure  about  the  domestic. 

Commissioner  Prouty.  Why  did  you  at  this  time  change  the  plan  of 
maintaining  the  rate  on  domestic  and  applying  the  flat  rate  on  the 
ex])ort? 

Mr.  McCabe.  Simply  because  we  felt  that  the  rate  on  domestic  could 
be  maintained,  and  it  was  a  matter  of  convenience  as  to  billing  on 
export. 

Commissioner  Prouty.  Was  that  done  by  any  concerted  action  of 
the  different  lines? 

Mr.  McCabe.  l^o.  It  was  understood  that  other  lines  would  do  the 
same  thing.  We  talked  it  over  with  them,  but  the  action  was  indi- 
vidual. 

Commissioner  Prouty.  At  that  time  you  i)ut  in  a  25-ceut  rate  on 
export  business? 

Mr.  McCabe.  Yes,  sir. 

Commissioner  Prouty.  How  did  you  arrive  at  that  rate?  Was 
there  any  agreement  between  you  and  other  lines? 


32fi  APPENDIX  a. 

Mr.  McOabe.  We  found  that  was  about  tlie  rate  by  other  lines  and 
as  high  as  we  could  maintain. 

Commissioner  Trout y.  Did  you  believe  the  same  rate  was  put  in  by 
other  lines'? 

Mr.  McOabe.  I  presume  so. 

Commissioner  Proutt.  When  you  reduced  your  rate  to  22  cents  did 
you  follow  other  lines  or  did  the  otlier  lines  follow  yon? 

Mr.  McOabe.  We  followed  other  lines. 

Commissioner  Prouty.  Yon  say  that  from  the  21st  of  July  to  Octo- 
ber you  maintained  a  25  cent  rate? 

Mr.  McOabe.  Yes,  sir. 

Commissioner  Prouty.  And  from  October  you  maintained  a  22-cent 
rate.  If  you  maintained  a  uniform  rate  of  25  and  22  cents,  why  could 
you  aot  maintain  a  30-cent  rate  on  ex])ort? 

Mr.  McOabe.  I  think  we  could  have  if  we  could  have  had  the  cooper- 
ation of  the  other  roads. 

Commissioner  Prouty.  You  can  maintain  an  export  rate  just  as  well 
as  domestic  when  rates  get  low  enough? 

Mr.  McOabe.  Yes,  sir. 

Commissioner  Prouty.  Who  gets  the  benefit  of  this  cut  in  the  rate? 

Mr.  McOabe.  That  I  am  unable  to  judge. 

Commissioner  Prouty.  You  have  no  opinion  about  that? 

Mr.  McOabe.  No. 

Commissioner  Prouty.  You  think  it  reduces  the  price  of  provisions 
in  Europe? 

Mr.  McOabe.  I  think  it  does. 

Commissioner  Prouty.  That  is  to  say,  you  think  the  foreigner  gets 
his  provisions  a  trifle  cheaper  on  account  of  the  reduction? 

Mr.  McOabe.  The  consumer  pays  less  for  his  goods. 

Commissioner  Prouty.  Did  you  in  any  way  publish  that  25-cent 
rate? 

Mr.  McCabe.  No,  sir. 

Commissioner  Prouty.  You  say  it  was  generally  understood;  that 
it  was  open  to  everybody  on  export  business? 

Mr.  McOabe.  Yes,  sir. 

Commissioner  Clements.  Could  you  furnish  a  statement  that  would 
show  all  these  shipments  from  Chicago  during  the  last  calendar  year, 
1901;  showing  the  published  rate  at  the  time  and  the  rate  actually 
charged,  and  the  refund  in  each  case? 

Mr.  McOabe.  I  doubt  very  much  whether  I  could  do  so. 

Commissioner  Clements.  What  is  the  difliculty  about  it? 

Mr.  McOabe.  I  think  our  records  have  not  been  kept  in  such  shape 
as  to  enable  us  to  do  that. 

Commissioner  Clements.  Where  would  they  fail  to  show  the  trans- 
action— at  what  particular  point? 

Mr.  McOabe.  After  the  statement  was  made  we  would  not  aim  to 
preserve  the  records. 

Commissioner  Clements.  Would  you  destroy  them? 

Mr.  McOabe.  Possibly.     I  car.  not  answer  that  definitely. 

Commissioner  Clements.  Are  you  in  the  habit  of  destroying  records 
not  a  year  old  ? 

Mr.  McOabe.  Sometimes. 

Commissioner  Clements.  But  generally? 

Mr.  McOabe.  If  they  are  not  essential  or  it  is  not  important  that 
they  should  be  kept. 


APPENDIX  a,  327 

Commissioner  Clements.  What  would  be  the  particular  reason  for 
destroying-  these  papers  aud  records'? 

Mr.  MoCabe.  Possibly  because  we  thought  you  might  want  them 
laid  before  you  some  time. 

Commissioner  Clements.  You  destroyed  the  evidence  bf  the  illegal 
transaction? 

Mr.  McCabe.  Yes,  sir;  that  is  right. 

Commissioner  Clements.  Then  you  can  not  furnish  this  because  you 
have  destroyed  them? 

Mr.  McCabe.  I  can  not  answer  that  definitely.     J  don't  know. 

Commissioner  Clements.  What  are  we  to  understand  are  the  facts? 
You  indicate  that  you  have? 

Mr.  McCabe.  I  beg  your  pardon.  I  didn't  say  we  had  destroyed 
them,  but  that  I  was  not  sure  they  had  been  kept. 

Commissioner  Clements.  If  they  have  not  been  destroj^ed  yon  can 
furnish  a  statement  showing  the  name  of  the  shipper  in  each  case,  the 
amount  of  freight  paid,  and  the  rebate  paid  back. 

Mr.  McCabe.  That  would  have  to  be  furnished  from  our  accounting 
department. 

Commissioner  Clements.  I  mean  your  company.  Your  accounting 
department  could  make  it  up? 

Mr.  McCabe.  I  could  not  say.  That  would  be  for  them  to  furnish. 
Whether  they  could  furnish  that  statement  or  not  I  do  not  know. 

Commissioner  Clements.  Who  is  at  the  head  of  your  accounting 
department? 

Mr.  McCabe.  Mr.  J.  W.  Renner,  our  comptroller. 

Commissioner  Clements.  Where  is  his  office? 

Mr.  McCabe.  Pittsburg. 

Commissioner  Clements.  At  the  time  you  were  making  these  rebates 
or  paying  these  rebates  and  departing  from  the  30-cent  rate,  what  was 
the  published  rate  from  Cincinnati  on  these  packing-house  products  to 
the  seaboard? 

Mr.  McCabe.  About  87  per  cent  of  the  rate  from  Chicago — about  26 
cents. 

Commissioner  Clements.  Did  you  make  concessions  or  any  rebates 
of  the  same  kind  on  Cincinnati  shipments  east  at  the  same  time  you 
were  making  them  from  here?    Was  there  any  cut  in  that  rate? 

Mr.  McCabe.  I  can  not  answer  that  definitely.  I  am  not  clear  on 
that  point. 

Commissioner  Clements.  At  what  minor  points  east  of  Chicago  do 
you  get  packing-house  products  ? 

Mr.  McCabe.  Get  them  at  Indianapolis  and  Louisville. 

Commissioner  Clements.  Was  there  any  cut  in  rates  from  those 
places  during  the  last  year? 

Mr.  McCabe.  I  think  so. 

Commissioner  Clements.  You  think  sot 

Mr.  McCabe.  There  were. 

Commissioner  Fifer.  On  both  foreign  and  domestict 

Mr.  McCabe.  On  export. 

Commissioner  Fifer.  Not  on  domestic T 

Mr.  McCabe.  I  think  not. 

Commissioner  Clements.  Who  takes  the  responsibility  for  doing 
these  things,  for  making  these  sei'ious  departures  aud  cuts,  in  regard 
to  the  Pennsylvania  Railroad ?  Is  it  you?  Do  you  do  it  without  any 
authority  from  the  officers  of  that  road  above  you,  or  do  you  have  their 
approval  of  it! 


828  APPENDIX    G. 

Mr.  McCabe.  I  am  in  charge  of  the  freight  traffic,  and  I  do  the  best 
r  can  under  the  circumstances. 

Commissioner  Clements.  Do  you  act  independently  of  them,  or  do 
you  have  to  have  their  approval? 

Mr.  McCabe.  I  assume  to  do  what  I  think  is  proper,  being  governed 
by  the  competitive  conditions. 

Commissioner  Clements.  Do  you  have  reason  to  know  tliat  the 
oflQcers  above  you  in  the  management  of  that  company's  affairs  knew 
of  it? 

Mr.  McCabe.  Not  in  detail. 

Commissioner  Clements.  I  do  not  mean  the  details.  I  could  have 
answered  that  myself.  But  as  to  the  general  fact  tbat  the  Pennsylvania 
Railroad  was  cutting  the  rate  in  this  serious  way,  was  it  known  to  the 
president  of  that  company  and  other  officers? 

Mr.  McCabe.  I  do  not  know. 

Commissioner  Clements,  liave  you  ever  had  any  conference  with 
the  officers  above  you  in  the  management  of  that  company's  affairs  in 
which  you  disclosed  this  condition  of  things? 

Mr.  McCabe.  I  have  said  to  them  from  time  to  time  that  rate  con- 
ditions were  so  and  so;  that  rates  were  not  being  maintained,  and  that 
our  com]»etitors  were  cutting  the  rates. 

Commissioner  Clemicnts.  And  that  you  must  cut  the  rates?  Did 
they  sanction  it,  or  approve  it,  or  tell  you  to  stoj)  it? 

Mr.  McCabe.  I  think  they  left  it  to  my  discretion. 

Commissioner  Clements.  Will  you  look  into  the  matter  to  see  if 
you  can  furnish  a  statement  of  the  shipments  made  from  Chicago  for 
the  last  calendar  year? 

Mr.  McCabe.  Yes,  sir. 

Commissioner  Clements.  Indicating  the  name  of  the  shipper,  the 
amount  of  freight  paid,  and  the  amount  refunded,  and  send  us  a  sam- 
ple of  one  of  the  cla,ims  upon  which  the  refund  was  made? 

Mr.  McCabe.  I  will  look  into  that. 

Mr.  Day.  This  traffic  that  you  carried  from  Chicago  on  the  25-cent 
rate,  what  route  took  it  out  of  Chicago? 

Mr.  McCabe.  The  Pennsylvania. 

Mr.  Day.  But  which  one  of  the  Pennsylvania  linest 

Mr.  MoCabe.  Both. 

Mr.  Day.  And  how  about  the  22-cent  rate? 

Mr.  McCabe.  Both  lines  carried  it. 

Mr.  Day.  Take  the  25-cent  ratej  there  was  a  shrinkage  there  of  5 
cents  a  hundred? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  From  the  ]>nblished  rate? 

Mr.  McCabe.  Prom  the  published  tariff. 

Mr.  Day.  Who  i:)articipated  in  that  shrinkage?  Take  the  traffic 
destined  to  New  York. 

Mr.  McCabe.  Our  own  line  through  to  New  York. 

Mr.  Day.  All  the  way  through? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  Do  you  mean  the  lines  east  of  Pittsburg,  or  did  this 
shrinkage  apply  only  to  the  lines  west  of  Pittsburg? 

Mr.  McCabe.  To  the  account  of  the  lines  Chicago  to  New  York. 

Mr.  Day.  The  lines  east  of  Pittsburg,  which  we  call  the  Pennsyl- 
vania Railroad,  bore  a  share  in  that? 

Mr.  McCabe.  Yes,  sir. 

Mr.  Day.  Did  it  bear  the  same  share  that  it  would  have  borne — did 


APPENDIX  a.  329 

it  get  the  same  percentage  out  of  the  22  or  25  cent  rates  tliat  it  would 
bave  received  out  of  the  30  cent  rate^ 

Mr.  McOabe.  Precisely  the  same. 

Mr.  Day.  What  is  the  percentage  of  the  Chicago  New  York  rate  that 
the  Fort  Wayne  takes? 

Mr.  McCabe.  It  is  approximately  50  per  cent.  That  is  not  exactly 
correct,  but  ai)proxiniately. 

Mr.  Day.  Is  it  less  or  more? 

Mr,  MoOabe.  I  tliink  west  of  Pittsburg  is  about  51  percent — 51  and 
and  a  fraction. 

Mr.  Day.  What  is  it  by  the  Panhandle*? 

Mr.  McCabe.  I  think  it  is  a  little  greater;  probably  52  per  cent. 

Mr.  Day,  The  Panhandle  takes  52  per  cent  out  of  the  Chicago-New 
York  rate? 

Mr.  McCabe.  It  is  adjusted  on  mileage. 

Mr.  Day.  Then  if  the  Panhandle  took  52  per  cent  the  Pennsylvania 
Eaihoad  would  take  48? 

Mr.  McCabe.  Forty-eight  per  cent. 

The  Chairman.  I  infer  from  your  testimony  that  you  desire  to  be 
understood  as  saying  that  there  was  no  actual  discrimination  between 
different  shippers  by  the  Pennsylvania  Railroad? 

Mr.  McCabe.  That  is  correct. 

The  Chairman.  When  the  rate  was  25  cents  it  was  25  to  everybody? 

Mr.  McCabe.  Yes,  sir. 

The  Chairman.  And  when  it  was  reduced  to  22  cents  all  shippers 
in  that  traffic  knew  it? 

Mr.  McCabe,  Yes,  sir. 

The  Chairman.  Did  the  25-cent  rate  apply  to  domestic  as  well  as  to 
export  traffic  ? 

Mr.  McCabe.  No,  sir. 

The  Chairman.  At  no  time? 

Mr.  McCabe.  Well,  there  have  been  times  in  the  past  when  possibly 
a  25  cent  rate  applied  to  domestic  traffic,  but  not  since  the  21st  of  July. 

The  Chairman.  What  would  the  rate  be  from  Indianapolis  when  it 
was  30  cents  from  Chicago? 

Mr.  McCabe,  Twenty  eight  cents — 93  per  cent  of  the  Chicago  rate. 

The  Chairman,  1  )id  I  understand  you  to  say  that  the  rate  from 
Indianapolis  was  shrunk  to  some  extent? 

Mr.  McCabe.  To  some  extent. 

The  Chairman.  Do  you  know  whether  the  concession  on  Indian- 
apolis was  proportionate  to  the  concession  on  Chicago  traffic? 

Mr.  McCabe,  I  can  not  say  positively. 

The  Chairman.  Is  it  not  the  general  fact,  Mr.  McCabe,  that  while 
there  was  no  discrimination  between  different  shippers  from  Chicago 
that  they  all  got  an  advantage  over  Indianapolis  and  Cincinnati 
shippers  of  the  same  traffic,  owing  to  the  reason  that  the  concession 
from  Chicago  was  greater  in  proportion  than  from  these  other  places? 

Mr.  McCabe.  No;  I  don't  know  that  to  be  the  fact. 

The  Chairman.  Do  you  think  the  fact  is  otherwise? 

Mr.  McCabe.  I  think  they  were  practically  on  a  parity  with  Chicago. 

The  Chairman.  So  that  if  the  tariff:'  adjustment  is  fair  as  between 
Chicago  and  Indianapolis  and  Cincinnati  on  this  class  of  traffic,  the 
ictual  rates  were  a])proximately  on  the  same  relative  basis? 

Mr.  McCabe.  I  should  think  so.    That  is  my  imjiression. 

The  Chairman.  Do  you  know  whether  that  is  true  or  not? 

Mr.  McCabe.  I  know  there  were  concessions  made,  but  whether 


330  APPENDIX    Q. 

the  coiK^essions  corres])oiid  in  each  ease  at  each  time  with  the  conces- 
sion from  C/hicaj;o  i  ;mi  not  |)iei)are(l  to  say  doliuitely. 

The  Chairman.  This  -J")  cent  rate  was  actually  maintained  by  your 
line  for  quite  a  long-  i)eriod? 

Mr.  McCabe.  Yes,  sir. 

The  Chaikman.  Was  there  any  reason  why  it  should  not  have  been 
published  1 

Mr.  MoCabe.  N^o;  I  think  there  was  no  good  reason  why  it  should 
not  have  been  published. 

The  Chairman.     And  the  same  is  true  of  the  22-cent  rale? 

Mr.  McCabe.  Except  it  was  a  pretty  low  rate  and  we  did  not  want 
to  give  that  official  recognition  in  a  tariff.     It  was  entirely-  too  low. 

Commissioner  Prouty.'  Suppose,  Mr.  McCabe,  that  when  you  made 
a  rate  like  that  you  were  compelled  by  law  to  publish  as  low  a  rate  as 
you  made,  what  effect  would  it  have  on  the  maintenance  of  rates? 

Mr.  McCabe.  I  think  it  would  probably  have  the  ettect  of  better 
maintenance  of  rates. 

Coujuiissioner  Fifer.  When  you  concluded  to  cut  the  rate,  what 
method  did  you  adopt  to  let  your  customers  know  about  it,  so  that  they 
could  all  take  advantage  of  it? 

Mr.  McCabe.  We  have  solicitors  here,  and  I  think  they  kept  pretty 
busy  getting  around  telling  parties  what  the  rates  were. 

Commissioner  Clements.  Can  you  state  with  certainty  that  there 
was  no  discinmination  between  shippers  and  that  they  all  got  the  same 
rate? 

Mr.  McCabe.  I  do  not  believe  there  has  been  any  discrimination. 

The  Chairman.  That  seems  to  be  all,  Mr.  McCabe. 

Witness  excused. 

Edward  F.  Cost,  having  been  duly  sworn,  testified  as  follows: 

Mr.  Day.  Give  your  name  to  the  stenographer  and  state  your  jtosition. 

Mr.  Cost.  Edward  F.  Cost;  freight  traffic  manager  of  the  Three  C's 
and  St.  Louis  Eailway,  Cincinnati. 

Mr.  DAy.  You  know  the  subject  of  this  inquiry? 

Mr.  Cost.  Yes,  sir. 

Mr.  Day.  It  will  save  time  and  we  will  progress  better  if  you  will  go 
ahead  and  tell  the  Commission  what  has  transpired  on  your  line  during 
the  last  six  months  of  1901,  if  that  is  representative  of  the  year. 

Mr.  CpsT.  It  is  really  nothing  move  than  has  already  been  stated,  so 
far  as  our  action  is  concerned.  We  have  naturally  followed  the  trend 
of  our  competitors.  We  are  not  so  largely  interested,  perhaps,  as  some 
of  the  others  in  the  transportation  of  dressed  meat  and  packing-house 
l)roducts  from  Chicago  and  the  Missouri  liiver.  In  fact  we  have  been 
practically  out  of  the  business  for  two  years,  and  never  carried  any 
dressed  meats  to  local  points  except  to  Cincinnati,  Louisville,  and 
Springfield,  but  in  the  Eastern  business  v/e  have  never  been  a  factor  in 
that  business.  The  Missouri  River  business,  I  say,  we  have  not  carried 
for  two  years,  or  we  have  not  entered  into  competition  for  tiie  business. 
We  may  have  received  vsome  business  for  interior  points  but  practically 
lione  for  the  seaboard.  If  we  had  any  it  was  very  little;  the  shipments 
have  been  very  few.  At  St.  Louis  we  have,  I  sui)pose,  carried  our  pro- 
portion of  the  business  from  all  of  the  industries  there,  and  we  have 
not,  I  do  not  suppose,  assessed  any  more  than  other  roads  in  doing  so; 
in  fact  if  we  did  we  could  not  get  the  business.  At  the  other  points 
at  which  we  are  interested,  Indianapolis  and  Louisville,  we  have  prac- 
tically placed  those  people  on  a  parity  with  what  we  understood,  was 


APPENDIX    O.  331 

being  done  elsewhere.  I  speak  now  of  export  provisions.  On  the 
domestic  I  want  to  y;iy  we  have  luaintaiiied  the  rate8;  particularly 
from  the  latter  point,  Indianapolis,  we  are  more  largely  interested  in 
pacldng-liouse  products  than  anywhere  else  on  direct  Eastern  ship- 
ments than  export.    I  do  not  know  that  1  can  add  any  more. 

Mr.  Day.  What  is  the  greatest  shrinkage  you  have  made  out  of  St. 
Louis  on  packing-house  products  ? 

Mr.  Cost.  1  think  it  was  on  the  20  cent  basis. 

Mr.  Day.  And  how  do  you  tidvetraftic  destined  for  New  York  and 
Boston  that  you  bring  from  tlie  Mississippi  River?  Where  do  you 
turn  it  over  to  connecting  lines'? 

Mr.  Cost.  Our  prin(ii)al  connections  are  the  Lake  Shore  and  the 
Nickel  Plate — the  Vanderbilt  lines. 

jMr.  Day.  Whose  traffic  do  you  take  principally? 

Mr.  Cost.  We  handle  from  all  of  tlicm— Swift  &  Morris,  the  St. 
Louis  Dressed  Beef^ — we  get  some  from  all. 

Mr.  Day.  And  whose  at  Indianapolis'? 

Mr.  Cost.  Kingan  &  Co. 

Mr.  Day.  What  shrinkage  is  made  out  of  Indianapolis'? 

Mr.  Cost.  The  proportion — the  rate  from  Indianai)oHs  is  28  cents, 
and  the  rate  from  here  is  30  cents;  I  think  that  is  it.  We  give  them 
the  proportion  made  on  93  per  cent  of  Chicago,  93  per  cent  of  the 
shrinkage  that  accrues  from  Chicago. 

Mr.  Day.  Ninety-three  per  cent  of  the  shrinkage  that  accrues  from 
Chicago*? 

Mr.  Cost.  Yes,  sir. 

Mr.  Day.  How  about  Cincinnati? 

Mr.  Cost.  If  we  had  any  we  would  work  on  the  same  basis.  We 
have  not  had  any  of  that  business  there. 

Mr.  Day.  Have  you  made  any  concessions  by  uuderbilling? 

Mr.  Cost.  No,  sir. 

Mr.  Day.  Or  by  carrying  at  false  weights'? 

Mr.  Cost.  No,  sir. 

Mr.  Day.  When  shrinkage  was  made  out  of  rates  from  any  of  these 
points,  Cincinnati,  Indianai)olis,  or  Chicago,  how  was  that  made  good 
to  the  shipper— by  flat  billing  or  by  voucher? 

Mr.  Cost.  In  some  cases  by  billing  and  in  some  cases  by  voucher. 

Mr.  Day.  Tell  the  Commission  what  the  form  was"^ 

Mr.  Cost.  It  generally  passed  through  our  olti(;e  for  approval,  and 
sent  by  us  passed  over  to  the  consolidated  lines,  or  fast  freight  line, 
and  sent  to  tlie  accounting  department  for  them  to  adjust,  and  a  divi- 
sion of  that  rate  made  with  all  the  lines  interested. 

Mr.  Day.  And  they  made  the  settlement '? 

Mr.  Cost.  Yes,  sir. 

Mr.  Day.  Made  through  the  accounting  department  of  the  fast 
freight  lines! 

Mr.  Cost.  Yes,  sir. 

Mr.  Day.  And  not  through  your  line'? 

Mr.  Cost.  No,  sir. 

Mr.  Day.  Of  the  G  cents  cut  made  out  of  St,  Louis,  what  proportion 
of  that  shrinkage  did  the  Big  Four  stand  where  you  turned  it  over  to 
the  Lake  Shore? 

Mr.  Cost.  Our  proportion  is  about  45  per  cent  of  the  through  rate, 
based  on  mileage. 

Mr.  Day.  Where  do  you  turn  it  over  to  the  Lake  Shore? 

Mr.  Cost.  At  Cleveland. 


832  APPENDIX   O. 

Mr.  Day.  You  take  45  per  cent  where  the  full  tariff  is  collected  t 

Mr.  Cost.  Yes,  sir. 

Mr.  Day.  Ami  where  the  full  tariff  is  uot  collected  do  you  still  take 
45  i)er  cent  of  wliate\er  is  collected? 

Mr.  Cost.  Of  whatever  is  agreed  upon  as  the  through  rate. 

Mr.  Day.  When  it  is  29  cents  you  take  45  per  cent  of  that? 

Mr.  Cost.  Yes,  sir. 

Mr.  Day.  And  the  Lake  Shore  would  stand  their  share  of  the  cut  ? 

Mr.  Cost.  Yes;  that  is  the  old  established  custom,  tor  a  line  that  is 
part  of  a  through  line  to  stand  their  share  of  a  reduction  in  rate. 

Mr.  Day.  And  if  the  Lake  Shore  turned  it  over  to  the  New  Vork 
Central  or  West  Shore,  those  lines  would  stand  their  share? 

Mr.  Cost.  That  is  usually  the  custom;  yes,  sir. 

Mr.  Day.  I  understand  you  to  say  that  no  concession  was  made,  so 
far  as  you  are  aware,  on  domestic  products  destined  for  domestic 
consumption? 

Mr.  Cost.  No,  sir. 

Mr.  Day.  That  the  cut  was  confined  to  export  traffic. 

Mr.  Cost.  To  export  business. 

Mr.  Day.  How  did  you  assure  yourselves  that  it  was  not  diverted 
from  export  to  domestic?     What  evidence  liad  you? 

Mr.  Cost.  It  is  generally  on  a  through  bill  of  lading;  consigned  to  a 
foreign  destination.  Of  course  we  have  no  positive  knowledge.  I  do 
not  believe  they  could  tamper  with  those  bills  at  the  seaboard.  It  is 
consigned  on  a  through  bill  of  lading  to  a  foreign  destination.  I  never 
knew  of  an  occurrence  of  that  kind. 

Mr.  Day.  Is  there  no  method  by  which  this  foreign  bill  of  lading  may 
be  surrendered  at  the  seaboard  and  the  trathc  diverted  to  domestic? 

Mr.  Cost.  I  do  uot  think  so. 

Commissioner  Fifer.  Have  you  never  had  any  suspicion  of  that 
being  done? 

Mr.  Cost.  No;  never. 

Mr.  Day.  When  these  rebates  of  concessions  are  presented,  or  these 
claims  for  them  are  presented,  they  come  through  your  office  and  are 
verified  there,  and  you  jiass  them  on  to  where? 

Mr.  Cost.  As  I  say,  to  the  accounting  department  of  our  fast  freight 
lines  that  handle  them. 

Mr.  Day.  And  who  do  they  draw  on  for  your  share? 

Mr.  Cost.  That  comes  through  our  treasurer,  of  course. 

Mr.  Day.  They  make  a  draft  there — your  auditing  department  does? 

Mr.  Cost.  Yes,  sir. 

Mr.  Day.  And  your  treasurer  sends  your  share  to  the  auditing 
department  of  the  fast  freight  line  and  they  make  the  distribution? 

Mr.  Cost.  Yes,  sir. 

Commissioner  Clements.  Can  you  send  us  a  statement  of  the  ship- 
ments of  last  year? 

Mr.  Cost.  I  think  I  can.     I  will  make  an  effort  to  do  so. 

Commissioner  Clements.  Showing  the  name  of  the  shipper,  the 
amount  of  freight,  the  amount  of  refund,  and  to  whom  refunded? 

Mr.  Cost.  Yes,  sir. 

Commissioner  Clements.  And  we  would  like  that  to  include  the 
extent  to  which  other  lines  participated  in  the  rebates,  how  much  they 
participated  in  the  shrinkage. 

The  Chairman.  During  the  period,  Mr.  Cost,  that  you  carried  for 
export  on  the  basis  of  a  25-cent  rate  from  Chicago,  was  there  a  consid- 


APPENDIX  a.  333 

erable  movement  ou  your  line  of  domestic  traffic  which  paid  the  full 
rate? 

Mr.  Cost.  No;  I  think  not.  I  do  not  think  the  domestic  ever  com- 
pares with  the  export  business  in  any  resj>ect.  Of  course  I  refer  to 
trmik  line  territory  as  compared  with  the  movement  of  export  business 
passing  the  same  way.  Our  domestic  business  does  not  amount  to 
anything. 

Tlie  Chairman.  Does  a  large  percentage  of  the  total  which  goes 
East  go  abroad? 

Mr.  Cost.  Yes,  sir;  of  what  we  handle. 

The  Chaieman.  From  what  sources,  then,  does  the  Eastern  territory 
get  its  dressed  beef? 

Mr.  Cost.  I  could  not  give  you  information  on  that.  We  are  not  a 
large  handler  of  domestic  dressed  beef  or  provisions.  I  suppose  it  is 
on  account  of  the  distribution  of  the  product  from  various  storehouses 
in  the  East,  and  no  doubt  there  are  a  great  many  small  jjackers  in  the 
East,  all  through  the  country. 

The  Chairman.  The  point  is  that  you  do  not  carry  much,  if  any, 
domestic? 

Mr.  Cost.  No,  sir ;  not  to  speak  of. 

The  Chairman.  Are  you  carrying  any  now? 

Mr.  Cost.  I  suppose  we  are.    I  could  not  tell  you  to  what  extent. 

The  Chairman.  At  the  present  time  is  the  published  rate  main- 
tained? 

Mr.  Cost.  Absolutely. 

The  Chairman.  Both  on  domestic  and  export! 

Mr.  Cost.  Yes,  sir. 

The  Chairman.  And  is  the  rate  the  same  for  both! 

Mr.  Cost.  Yes,  sir. 

The  Chairman.  When  that  is  the  case,  is  there  any  considerable 
movement  for  domestic  consumption? 

Mr.  Cost.  I  do  not  know  that  that  makes  any  difference. 

The  Chairman.  I  observed  that  you  spoke  of  your  road  as  following 
the  others. 

Mr.  Cost.  Yes,  sir. 

The  Chairman.  I  have  heard  a  similar  statement  from  other  gentle- 
men.    Have  you  any  idea  who  is  the  leader? 

Mr.  Cost.  No;  I  have  not.     I  could  not  give  you  that  information. 

The  Chairman.  You  never  heard  of  the  leader? 

Mr.  Cost.  No,  sir. 

The  Chairman.  They  are  all  followers. 

Mr.  Cost.  That  does  really  seem  to  be  the  case.  I  feel  very  positive 
about  our  situation  in  the  matter. 

Commissioner  Fifer.  Do  you  think  there  is  any  difficulty  in  main- 
taining a  published  export  rate? 

Mr.  Cost.  No,  sir. 

Commissioner  Fifer.  Do  you  think  it  can  be  done? 

Mr.  Cost.  Yes,  sir. 

The  Chairman.  You  do  not  agree  with  Mr.  Whitney  about  it? 

Mr.  Cost.  No,  sir. 

The  Chairman.  That  there  is  any  more  difficulty  in  maintaining 
export  than  domestic? 

Mr.  Cost.  No,  sir. 

Commissioner  Fifer.  There  was  testimony  at  Kansas  City  that  tramp 
steamers  came  in  at  the  Gulf  ports  and  took  stuff  for  less  than  regular 


334  APPENDIX  a. 

line  steamers — cut  rates — and  made  it  imi)ossible  for  the  roads  to  main- 
tain rates  from  the  West  to  the  seaboard.     Is  that  true? 

Mr.  Cost.  That  is  not  our  experience. 

The  Chairman.  Is  Mr.  McCabe  still  in  the  roomt 

Mr.  McCabe  responded. 

D.  T.  McCabe,  recalled. 

The  Chairman.  I  forgot  to  ask  you  the  same  question  that  I  asked 
Mr.  Cost.  I  infer  from  what  you  stated  that  you  see  no  great  difliculty 
in  publishing  and  maintaining  a  tariff  on  export  traffic. 

Mr.  McCabe.  None,  whatever. 

The  Chairman.  And  there  is  no  reason  why  it  should  not  be  done? 

Mr.  McCabe.  No  reason  why  it  should  not  be  done. 

The  Chairman.  This  theory  of  fluctuating  ocean  rates  is  not  a  per- 
suasive one  to  your  mind? 

Mr.  McCabe.  No,  sir.  I  think  the  rate  could  be  maintained  to  the 
seaboard. 

Mr.  Day.  Suppose,  Mr.  McCabe,  a  railroad  controlled  a  line  of  steam 
ships  and  they  should  maintain  a  fixed  rate— the  published  through  rate 
to  the  ocean — and  give  a  through  bill  of  lading  at  a  very  low  rate  across 
the  ocean,  and  then  settle  with  the  ocean  steamship,  would  that  not 
demoralize  rates? 

Mr.  McCabe.  It  would  be  very  apt  to. 

Mr.  McCabe  was  excused,  and  the  examination  of  Mr.  Cost  resumed. 

Mr.  Day.  Mr.  Cost,  how  did  you  make  known  the  cut  in  your  rates? 

Mr.  Cost.  To  whom? 

Mr.  Day.  To  the  people  affected.  Take  it  when  you  put  the  rate  in 
from  the  Mississippi  Kiver,  or  St.  Louis  to  the  Atlantic  seaboard.  How 
did  you  make  that  known  to  shippers  that  you  would  carry  at  that  rate? 

Mr.  Cost.  There  are  various  mediums  of  that.  1  suppose  our  people 
at  Indianapolis  would  notiliy  them  or  let  them  know  what  we  proposed 
to  do  and  keep  them  in  line  with  other  points.  There  are  various  ways 
of  doing  that.    We  go  to  the  shippers;  thei'e  is  no  secret. 

Mr.  Day.  You  mentioned  St.  Louis.  How  would  you  let  Morris 
know? 

Mr.  Cost.  I  could  not  tell  you  how  that  is  communicated. 

Mr.  Day.  Do  they  have  a  traffic  man  ? 

Mr.  Cost.  I  think  they  have  a  man  there. 

Mr.  Day.  Have  they  a  man  who  looks  after  rates? 

Mr.  Cost.  Yes;  just  the  same  as  we  have  our  agents  to  visit  them. 

Mr.  Day.  Who  is  the  man  who  represents  Morris  that  comes  to  see 
you? 

Mr.  Cost.  Me  personally  ? 

Mr.  Day.  Yes. 

Mr.  Cost.  I  hardly  ever  come  in  contact  with  those  people. 

Mr.  Day.  Or  the  man  who  comes  to  your  subordinates? 

Mr.  Cost.  I  sui)pose  the  regular  representative;  the  man  authorized 
to  conduct  such  negotiations.     I  could  not  tell  you. 

Mr.  Day.  Have  you  had  any  conti  act  with  any  packer  for  any  period 
of  time  to  fix  rates,  or  any  understanding  of  that  kind? 

Mr.  Cost.  No,  sir. 

Mr.  Day.  You  give  them  the  benefit  of  what  the  rate  is  at  the  time? 

Mr.  Cost.  Yes,  sir;  there  is  no  fixed  understanding. 

Witness  excused. 

Mr.  McCabe  was  recalled. 

Mr.  Day.  Mr.  McCabe,  I  will  ask  you  whether  you  have  had  any 
agreement  or  understanding  during  the  past  year  or  year  and  a  half 


APPENDIX   G. 


335 


with  any  packer  that  you  would  give  them  a  certain  rate  for  a  certain 
time? 

Mr.  McCabe.  No,  sir;  if  we  give  them  a  rate  it  is  liable  to  be  can 
celed  the  next  day. 

Mr.  Day.  You  never  entered  into  an  agreement  in  advance  that  you 
would  put  in  a  lower  rate  and  maintain  it  for  any  particular  time? 

Mr.  McCabi].  No. 

Mr.  Day.  That  is  all. 

The  Chairman.  We  will  take  a  recess  until  2  o'clock. 

The  Commission  at  12.40  p.  m.  took  a  recess  until  2  o'clock. 

apter  recess. 

2  o'clock  p.  m. 

The  Chairman.  Who  will  you  call  next,  Mr.  Day? 
Mr.  Day.  B.  B.  Mitchell. 

B.  B.  Mitchell,  being  duly  sworn,  testified  as  Collows-- 

Mr.  Day.  Just  give  your  name,  Mr.  Mitchell. 

Mr.  Mitchell.  B.  B.  Mitchell,  general  traffic  manager  of  the  Mich- 
igan Central  Eailroad. 

Mr.  Day.  Were  you  here  this  morning? 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  You  understand  the  subject  of  inquiry  here,  and  I  wish 
you  would  be  good  enough  to  state  to  the  Commission  what  concessions 
obtained  in  which  the  Michigan  Central  participated  in  carrying  of 
packing-house  products  and  dressed  beef  to  New  York,  Boston,  Phila- 
delphia, and  points  taking  the  same  rates  that  those  points  take  during 
the  year  1901,  or  you  can  confine  yourself  in  the  first  instance  to  subse- 
quent to  July  1. 

Mr.  Mitchell.  The  going  rate  has  been  on  the  same  lines  as  the 
testimony  rendered  here  this  morning.  There  were  certain  periods 
where,  so  far  as  provisions  are  concerned,  different  rates  prevailed. 
The  going  allowance  on  dressed  beef  has  been  about  5  cents  oft  the 
tariff' — and  packing-house  products. 

Mr.  Day.  Five  cents  from  what  point? 

Mr.  Mitchell.  From  Chicago.  It  was  testified  to  here  this  morning, 
and  the  figures  named  are  in  line  with  such  as  the  Michigan  Central 
has  used.    Is  it  necessary  to  repeat  these? 

Mr.  Day.  I  would  rather  you  state  what  occurred  on  your  line,  so 
that  we  may  know. 

Mr.  iNliTCHELL.  There  was  a  25-ceut  export  rate  in  from  July  21,  as 
I  recollect. 

Mr.  Day.  That  applied  on  what? 

Mr.  Mitchell.  On  export  provisions.  There  was  a  22-cent  rate 
that  went  into  effect  later  in  the  season  and  which  remained  in  effect 
until  the  expiration  of  the  year.  That  is  on  export.  There  has  been 
no  allowance  by  the  Michigan  Central  on  domestic  business. 

Mr.  Day.  On  traffic  that  came  from,  say,  points  west  of  Chicago, 
take  the  Missouri  Eiver — Omaha,  for  example — what  concession  was 
made  in  the  rate  from  Omaha  to  Eastern  points  in  which  you  participated  ? 

Mr.  Mitchell.  On  provisions? 

Mr.  Day.  Yes,  sir. 

Mr.  Mitchell.  On  export  provisions  the  proportion  of  the  rate  was 
on  the  same  basis,  I  think  about  24  cents;  I  am  not  very  clear  on  that. 

Mr.  Day.  About  1  cent  under  the  other? 


386  APPENDIX   Q. 

Mr.  Mitchell.  About  1  cent  under  what  we  call  the  Chicago  local 
rate. 

Mr.  Day.  The  division  of,  say,  the  Omaha  New  York  rate  on  provi 
sions  was  lii  cents  from  Chicago  to  New  York  at  the  time  the  25cent 
rate  was  in  from  Chicago  to  New  York  on  export? 

Mr.  Mitchell.  1  think  so. 

Mr.  Day.  During  any  period  during  last  year  did  your  road  partici- 
pate in  any  concession  in  provisions  carried  for  domestic  consumption? 

Mr.  Mitchell.  No,  sir. 

Mr.  Day.  Not  at  all? 

Mr.  Mitchell.  No.  sir. 

Mr.  Day.  In  no  instance? 

Mr.  Mitchell.  Not  to  my  knowledge. 

Mr.  Day.  Had  you  any  reason  to  believe  it  had? 

Mr.  Mitchell.  It  may  have.  I  do  not  know,  sir.  We  have  made 
no  allowance  on  domestic  consumption. 

Mr.  Day.  You  have  made  none? 

Mr.  MiT(!HELL.  Have  made  none. 

Mr.  Day.  How  did  you  determine  that  the  traffic  yon  did  carry  at  a 
rate  below  the  published  rate  was  actually  exported? 

Mr.  Mitchell.  All  export  provisions,  so  far  as  I  know,  are  han- 
dled on  through  bills  of  lading.  A  bill  of  lading  is  given  from  the  point 
of  shipment  to  the  foreign  port;  that  is  passed  over  to  the  packers, 
and,  I  understand,  banked  by  them.  Therefore  there  is  no  way,  it  seems 
to  me,  of  stopping  a  car  of  export  provisions  at  the  seaboard  for  domes- 
tic use. 

Mr.  Day.  Take  these  provisions  you  carried  from  Chicago  on  the  24- 
cent  division.  What  was  the  total  rate  at  that  time  from  Omaha  or  the 
Missouri  River  to  New  York? 

Mr.  Mitchell.  You  mean  the  published  rate? 

Mr.  Day.  No;  the  actual  rate  the  stuff  was  carried  at. 

Mr.  Mitchell.  I  do  not  know. 

Mr.  Day.  You  do  not  know  the  actual  rate  from  the  Missouri  River 
east? 

Mr.  Mitchell.  From  the  Missouri  River  to  Chicago? 

Mr.  Day.  I  mean  from  Omaha  to  Chicago,  or  from  the  Mississij)pi 
River  to  Chicago. 

Mr.  Mitchell.  We  should  know  what  the  rate  from  the  river  was. 
It  was  on  a  corresponding  basis,  116  per  cent  of  28  or  120  per  cent, 
whatever  the  basis  was. 

Mr.  Day.  One  hundred  and  sixteen  per  cent  of  24? 

Mr.  Mitchell.  No;  the  basis  would  figure  diflerently. 

Mr.  Day.  What  would  the  rate  be  there  from  the  Mississippi  River 
to  New  York  when  the  24-cent  basis  was  put  in  by  you  from  Chicago? 

Mr.  Mitchell.  Probably  29  cents. 

Mr.  Day.  Who  i^articipated  in  this  24-cent  division  from  Chicago 
east  with  you  ? 

Mr.  Mitchell.  By  whatever  line  the  property  may  have  been 
routed. 

Mr.  Day.  What  routing  did  prevail? 

Mr.  Mitchell.  The  major  part  of  the  business  went  over  what  is 
called  the  Yanderbilt  lines,  the  West  Shore  and  New  Y'ork  Central. 

Mr.  Day.  In  those  instances  did  the  New  York  Central  participate 
in  the  shrinkage? 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  And  the  Lake  Shore  likewise! 


APPENDIX   Q.  337 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  Now,  tell  us  about  dressed  beef  the  last  year — about  the 
rates. 

ivlr.  Mitchell.  1  stated  that  the  goiug  rate  was  about  5  cents. 

Mr.  Day.  That  was  tVoui  Chicago? 

Mr.  Mitchell.  From  Chicago. 

Mr.  Day.  Can  you  tell  what  the  rate  was  from  the  Mississippi  River 
at  that  time — the  actual  rate? 

Mr.  Mitchell.  I  have  not  the  figures  with  me  aud  do  not  remember 
the  figures.     1  should  say  that  the  rate  from  Chicago  was  40  cents 

Mr.  Day.  I  do  not  mean  the  publislied  rate.  I  mean  the  rate  at 
which  the  dressed  beef  was  being  carried  to  New  York. 

Mr.  Mitchell.  That  is  wbat  I  am  trying  to  tell.  If  the  rate  from 
Chicago  was  net  40  cents,  the  rate  from  the  river  would  be  110  or  120 
per  cent  of  that,  whatever  the  percentage  might  be. 

Mr.  Day.  Now,  how  was  this  traffic  billed  in  which  your  division  or 
the  division  east  of  Chicago  is  24  cents  on  provisions'? 

Mr.  Mitchell.  Billed  Hat. 

Mr.  Day.  And  how  on  the  25-cent  ratet 

Mr.  Mitchell.  Flat. 

Mr.  Day.  In  all  instances'? 

Mr.  Mitchell.  So  far  as  I  know.    Those  are  my  instructions. 

Mr.  Day.  Where  a  concession  was  made  or  a  shrinkage  of  the  rate 
was  made,  did  you  make  any  settlements  by  voucher'? 

Mr.  Mitchell.  Undoubtedly  we  did. 

Mr.  Day.  Last  year? 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  When  settlement  was  made  by  voucher,  what  was  the  course 
of  procedure;  how  was  it  made;  to  whom  was  the  claim  presented? 

Mr.  Mi  rcHELL.  No  doubt  to  our  representative  at  Chicago  or  the 
river,  and  by  them  passed  to  me. 

Mr.  Day'.  Then  you  approved  them? 

Mr.  Mitchell.  I  do  not  approve  them  until  they  make  them  up. 

Mr.  Day.  They  were  presented  to  your  representative  at  the  river  or 
Chicago,  and  he  sent  them  to  you.     What  did  you  do? 

Mr.  Mitchell.  Made  a  voucher  and  sent  them  to  our  fast-freight 
line  office  for  distribution,  and  they  were  afterwards  paid. 

Mr.  Day.  Paid  by  whom? 

Mr.  Mitchell.  By  the  manager  of  the  fast-freight  line. 

Mr.  Day.  He  paid  them  direct  to  the  claimants? 

Mr.  Mitchell.  No;  to  my  office. 

Mr.  Day.  Who  made  the  payment  in  your  office t 

Mr.  Mitchell,  One  of  my  clerks. 

Mr.  Day.  Under  your  direction? 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  Did  you  make  any  settlement  with  Mr.  McNaughton,  of 
the  Cudahy  Company? 

Mr.  Mitchell.  I  presume  we  did. 

Mr.  Day.  And  with  Mr.  Urquhart,  of  the  Omaha  Packing  Company? 

Mr.  Mitchell.  I  presume  we  did;  I  can  not  say  positively. 

Mr.  Day.  Have  you  made  some  settlements  with  Mr.  Jenkins? 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  Of  the  Hammond  Packing  Company? 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  During  the  past  year? 

Mr.  Mitchell.  Yes,  sir. 

741a— 05 22 


338  APPENDIX    G. 

Mr.  Day.  Were  those  settlements  you  made  with  those  men  I  named 
on  dressed  meat  or  on  packing-house  provisions,  the  bulk  of  them? 

Mr.  Mitchell.  Both,  probably. 

Mr.  Day.  Mr.  Mitchell,  was  there  any  shrinkage  made  by  way  of 
uuderbilling? 

Mr.  Mitchell.  Never. 

Mr.  Day.  Underweighiugl 

Mr.  Mitchell.  Never;  not  with  my  knowledge  or  consent. 

Mr.  Day.  You  never  knew  of  anything  of  that  kind  on  your  road  last 
year? 

Mr.  Mitchell.  Never,  sir. 

Mr.  Day.  When  did  you  make  the  last  settlement  with  Mr.  Jenkins? 

Mr.  Mitchell.  I  do  not  remember. 

Mr.  Day.  About  how  long  ago? 

Mr.  Mitchell.  About  a  month  ago. 

Mr.  Day.  That  was  on  a  basis  of  li^  cents? 

Mr.  Mitchell.  My  impression  is  that  Mr.  Jenkinses  export  business, 
and  the  only  business  on  which  any  allowance  was  made,  was  billed 
flat.  I  am  not  clear  on  that,  whether  it  was  all  billed  flat.  My  instruc- 
tions were  to  do  it. 

Mr.  Day.  If  any  settlements  were  made  on  vouchers,  they  were  made 
before  the  22  or  25  cent  rate  went  into  operation  ? 

Mr.  Mitchell.  If  so,  yes,  sir. 

Mr.  Day.  I  understood  you  to  say  that  the  25-cent  rate  went  in  in 
July? 

Mr.  Mitchell.  I  think  July  21. 

Mr.  Day.  I  think  you  stated,  but  I  will  ask  what  was  the  greatest 
concession  made  in  which  you  participated  prior  to  July  21,  during  1901  ? 
I  mean  your  line  when  I  say  "you." 

Mr.  Mitchell.  So  far  as  I  can  remember,  5  cents.  I  have  no  recol- 
lection of  any  other. 

Mr.  Day.  In  any  of  these  concessions  made  between  Omaha  and 
Kansas  City  and  Chicago  on  traffic  that  you  carried  on  east,  did  you 
have  anything  to  do  with  the  concessions  made  west  of  the  river,  west 
of  the  Mississippi,  or  between  the  Mississippi  and  Chicago? 

Mr.  Mitchell.  No,  sir. 

Mr.  Day.  You  had  nothing  at  all  to  do  with  any  concession  except 
that  much  as  related  to  the  shipments  east  of  Chicago? 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  Did  you  participate  in  any  traffic  coming  from  the  Missis- 
sippi River  by  way  of  St.  Louis  or  the  lower  crossings? 

Mr.  Mitchell.  You  mean  coming  to  us  through  our  Chicago  termi- 
nals? 

Mr.  Day.  Yes. 

Mr.  Mitchell.  Yes,  sir. 

Mr.  Day.  Would  you  participate  in  the  concessions  there  the  same 
as  when  it  came  by  way  of  Chicago  and  the  Northwestern,  for  instance, 
or  any  of  these  lines  at  the  upper  crossings? 

Mr.  Mitchell.  Undoubtedly  we  should. 

Mr.  Day.  Did  you  make  any  greater  concessions  on  traffic  that  came 
by  any  one  line  from  the  West,  say  from  the  Mississippi  liiver,  than 
you  did  by  any  other  line? 

Mr.  Mitchell.  Not  knowingly. 

Mr.  Day.  This  rate — this  concession — was  open  to  all  the  lines ;  you 
participated  in  it  with  any  of  them  t 

Mr.  Mitchell.  Yes,  sir. 


APPENDIX   Q, 


339 


Mr.  Day.  I  think  that  is  all  I  wish  to  ask,  Mr.  Mitchell. 

Comiuissioner  Clements.  These  rebates  you  paid,  were  they  paid  by 
check  ? 

Mr.  Mitchell.  As  a  rule,  yes,  sir. 

Commissioner  Clements.  Who  would  the  check  be  signed  byl 

Mr.  Mitchell.  By  the  bank  it  was  obtained  from. 

Commissioner  Clements.  Signed  by  the  bank? 

Mr.  Mitchell.  From  which  it  was  obtained. 

Commissioner  Clements.  What  authority  would  the  bank  have  to 
pay  it! 

Mr.  Mitchell.  They  would  have  a  check  probably  of  my  own. 

Commissioner  Clements.  That  would  be  drawn  in  favor  of  the  bank? 

Mr.  Mitchell.  Drawn  in  favor  of  the  bank. 

Commissioner  Clements.  And  the  bank  would  pay  the  rebate  to  the 
shipper  1 

Mr.  Mitchell.  No,  sir;  the  bank  would  furnish  such  exchange  as 
was  asked  for. 

Commissioner  Clements.  Why  was  it  done  that  way?  I  do  not 
understand  it  very  clearly. 

Mr,  Mitchell    Would  you  hke  to  have  me  make  it  clearer? 

Commissioner  ClemI'NTS.  I  wish  you  would. 

Mr.  Mitchell.  The  check  comes  to  me  from  Buffalo  covering  a 
number  of  amounts;  that  is,  covering  a  sum  of  money  to  pay  a  certain 
lot  of  claims.  That  check  is  de])Osited  and  checked  against  by  myself, 
and  the  checks  I  malie  are  the  checks  issued  by  the  bank;  that  is,  the 
bank  exchange  which  is  sent  about  the  country  in  payment  of  these 
bills. 

Commissioner  Clements.  You  can  not  furnish  us  a  statement  of  the 
shipments  over  your  road  last  year  of  these  products,  indicating  the 
name  of  the  shipper,  the  amount  of  the  shipment,  the  amount  of  the 
freight,  and  the  amount  of  the  rebate? 

Mr.  Mitchell.  I  can  not,  sir.  I  can  furnish  the  tonnage  and  charges 
and  the  shij^per,  and  I  can  furnish  you  some  portions  of  the  rebates.  I 
can  Jiot  say  at  the  moment  how  far  back  I  can  go. 

Commissioner  Clements.  Could  you  do  it  covering  last  year? 

Mr.  Mitchell.  No,  sir ;  I  can  give  a  portion  of  the  year. 

Commissioner  Clements.  Back  to  what  time? 

Mr.  Mitchell.  I  presume  six  months.  I  can  not  say  without  going 
into  detail. 

Commissioner  Clements.  During  the  last  six  months,  as  I  under- 
stand, they  were  billed  on  what  you  call  flat  rates? 

Mr.  Mitchell.  Not  altogether.  Necessarily  some  of  the  billing 
creei)S  in  on  the  tariff  rate. 

Commissioner  Clements.  What  is  the  diiflculty  about  showing  the 
same  thing  for  the  first  half  of  last  year? 

Mr.  Mitchell.  I  think  the  papers  are  not  in  existence. 

Commissioner  Clements.  Wliat  has  become  of  themt 

Mr.  Mitchell.  They  are  probably  destroyed. 

Commissioner  Clements.  You  mean  the  claims  and  pajjers  relating 
to  them? 

Mr.  Mitchell.  Yes,  sir. 

Commissioner  Clements.  The  entries  on  your  books  would  show, 
would  tliey  not? 

Mr.  Mitchell.  We  do  not  have  any  books. 

Commissioner  Clements.  How  do  you  run  a  railroad  without  books? 

Mr.  Mitchell.  I  am  referring  to  the  special  settlements  you  refer  to. 


340  APPENDIX  a. 

Commissioner  Clements.  You  do  not  make  use  of  books  in  tho?.© 
transactions'? 

Mr.  Mitchell.  I  have  not  made  use  of  them;  no,  sir. 

Commissioner  Clements.  Why  do  you  except  that  business  from 
the  other  and  transact  it  without  books  and  then  destroy  the  papers? 

Mr.  Mitchell.  It  was  thought  to  be  a  wise  plan  to  pursue. 

Commissioner  Clements.  Is  the  management  of  your  road  cognizant 
of  this  method  of  doing  business? 

Mr.  Mitchell.  The  freight  department  of  the  Micliigan  Central  is 
handled  by  myself.  I  have  no  doubt  the  management  may  have  some 
idea  of  what  is  being  done.    They  are  not  conversant  with  the  details. 

Commissioner  Clements.  Have  you  gone  over  it  with  the  managers 
and  those  above  you  sufficiently  to  say  that  they  consider  that  a  great 
railroad  is  justilied  in  transacting  its  business  that  way,  and  therefore 
approve  of  it? 

Mr.  Mitchell.  The  management  of  the  road  necessarily  has  knowl- 
edge of  the  general  matters  and  the  way  they  are  handled.  The  depart- 
ments, as  I  understand,  are  given  authority  as  a  rule  to  manage  that 
department  to  the  best  of  their  ability. 

Commissioner  Clements.  How  much  did  you  ever  pay  out  at  one 
time  in  regard  to  any  one  of  these  transactions? 

Mr.  Mitchell.  I  can  not  say. 

Commissioner  Clements.  Well,  about  how  much?  Have  you  any 
idea? 

Mr.  Mitchell.  Well,  $5,000,  approximately. 

Commissioner  Clements.  Do  you  know  who  you  paid  that  to? 

Mr.  Mitchell.  No,  sir. 

Commissioner  Fifer.  To  whom  were  your  heaviest  rebates  paid, 
taking  the  last  year? 

Mr.  Mitchell.  Well,  they  were  paid  to  Hammond  &  Co.,  or  the 
G.  H.  Hammond  Company,  or  Cudahy  &  Co.,  or  Schwarzschild  «.^"  Sulz- 
berger.   They  are,  perhaps,  among  the  heaviest. 

Commissioner  Fifer.  How  much  would  their  rebates  amount  to  in 
the  course  of  a  year  ? 

Mr.  Mitchell.  I  do  not  know.  I  never — do  you  mean  each  or 
collectively? 

Commissioner  Fifek.  Each  one. 

Mr.  Mitchell.  Perhaps  lifty  or  sixty  thousand  dollars. 

Commissioner  Clements.  Do  you  mean  to  say  that  papers  in  these 
transactions — that  is  the  way  I  understand  you,  and  I  do  not  want  to 
do  you  or  your  road  an  injustice — that  you  destroy  these  papers  in 
order  to  destroy  the  evidence  of  these  transactions? 

Mr.  Mitchell.  The  papers  such  as  have  been  destroyed — I  said 
before  that  I  do  not  know  how  far  back  that  goes — they  were  destroyed 
because  their  usefulness  for  our  purposes  had  goue  and  passed. 

Commissioner  Clements.  You  said  you  did  not  keep  books  about 
these  matters  ? 

Mr.  Mitchell.  No,  sir. 

Commissioner  Clements.  Is  that  for  the  purpose  of  concealing  the 
transactions? 

Mr.  Mitchell.  It  was  never  considered  necessary  to  keep  books  in 
regard  to  those  accounts. 

Commissioner  Clements.  Do  you  destroy  your  other  i)apers  as  recent 
as  these? 

Mr.  Mitchell.  Not  as  a  rule,  sir. 

Commissioner  Clements.  Well,  I  will  ask  you  again  if  you  destroy 


APPENDIX   Q.  341 

these  papers  in  order  to  destroy  the  evidence  of  the  transactions  to 
which  they  relate? 

Mr.  Mitchell.  Well,  L  have  endeavored  to  answer  your  question, 
Mr.  Commissioner,  and  have  made  three  statements  on  the  subject,  1 
think. 

Commissioner  Clements.  Neitlier  of  which  exactly  answered  the 
question,  as  I  understand  it.  You  do  not  wish  to  add  anything  further 
to  that? 

Mr.  Mitchell.  Certainly  we  should  dislike  very  much  to  have  those 
papers  exposed  to  the  general  i)ul)lic. 

Commissioner  Clements.  Why? 

Mr.  Mitchell.  It  would  be  an  unwise  thing  from  a  railroad  stand- 
point to  have  such  matters  going  about. 

Commissioner  Clements.  Why  would  it  be  unwise  to  disclose  the 
method  of  procedure  ? 

Mr.  Mitchell.  Well,  on  account  of  the  interstate  law. 

Commissioner  Clements.  Because  it  violates  the  law,  yes.  That  is 
what  you  really  mean,  is  it  not"? 

Mr.  Mitchell.  I  suppose  that  is  it,  sir. 

Commissioner  Clements.  That  is  all. 

The  Chairman.  Mr.  Mitchell,  are  you  correctly  understood  as  say- 
ing that  when  the  rate  from  Chicago  was  25  cents  in  fact  that  that 
rate  was  the  rate  by  all  the  lines'? 

Mr.  Mitchell.  So  far  as  I  know,  it  was. 

The  Chairman.  And  that  continued  for  quite  a  long  period  of  time? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  And  according  to  your  understanding  all  the  lines 
engaging  in  this  traflQc  were  carrying  it  on  that  basis? 

Mr.  Mitchell.  I  think  so. 

The  Chairman.  The  percentage  which  ordinarily  applies  on  the 
Islew  York-Chicago  rate  being  applied  to  the  rate  on  which  this  traffic 
was  hauled  ? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  If  you  could  maintain  the  25  cent  rate,  why  not 
the  published  rate? 

Mr.  Mitchell.  There  is  no  reason  in  the  world  that  that  rate 
could  not  be  maintained  except  a  sentimental  reason. 

The  Chairman.  What  is  the  sentimental  reason? 

Mr.  Mitchell.  I  will  undertake  to  explain.  The  competition  as 
brought  before  us,  or  the  alleged  evidence  of  competition,  is  in  a  great 
measure,  in  my  opinion,  sentimental.  I  think  in  many  cases  it  does 
not  exist,  but  it  goes  from  one  transporter  to  another,  and  we  finally 
fall  into  the  trap  and  undertake  to  meet  these  alleged  conditions. 

Commissioner  Clements.  You  mean  by  that  the  alleged  cutting  of 
rates  by  other  lines? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  I  suppose  in  this  matter  you  are  a  "follower?" 

Mr.  IVIiTCHELL.  We  undertake  to  be  followers.  We  have  no  desire 
to  be  leaders;  do  not  intend  to  be,  and,  too,  as  far  as  my  knowledge 
goes,  never  have  been. 

The  Chairman.  Now,  these  rates  you  spoke  of,  25  cents  and  22 
cents,  only  applied  on  export  traffic? 

Mr.  Mitchell.  By  us  on  export  traffic. 

The  Chairman.  During  the  period  that  these  rates  actually  applied 
on  export  traffic  were  you  carrying  the  same  kind  of  traffic  for  domes- 
tic consumption  for  the  Eastern  part  of  the  country? 


342  APPENDIX  a, 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  Did  you  get  the  full  tariflf  rate  on  that! 

Mr.  Mitchell.  Yes,  sir;  so  far  as  1  know,  I  believe  we  did. 

The  Chairman.  And  that,  irrespective  of  the  origin  or  destination 
of  any  particular  shipment ? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  Are  you  as  confident  that  business  is  so  conducted 
that  no  traflBc  billed  as  export  and  carried  as  export  is  diverted  at  the 
eastern  seaboard  for  domestic  consumption*? 

Mr.  Mitchell.  I  am  very  well  satisfied  of  it. 

The  Chairman.  Has  any  case  of  that  kind  ever  come  to  your  knowl- 
edge? 

Mr.  Mitchell.  Never. 

The  Chairman.  Have  you  ever  had  any  information  that  that  is 
done? 

Mr.  Mitchell.  Never. 

The  Chairman.  Were  you  carrying  a  considerable  amount  of  domes- 
tic traffic  at  the  same  time  that  these  25  and  22  cent  rates  applied  on 
export? 

Mr.  Mitchell.  We  were  carrying  all  the  packers  whose  export  prod- 
uct we  moved — we  moved  their  domestic;  therefore  we  carried  our  full 
share,  I  should  say,  of  domestic  traffic. 

The  Chairman,  Can  you  give  us  some  idea  of  the  relative  amounts 
of  export  and  domestic  traffic  of  this  kind  carried  during  the  last  six 
months  of  1901? 

Mr.  Mitchell.  You  mean  the  percentage  of  each? 

The  Chairman.  Yes,  sir. 

Mr.  Mitchell.  I  should  say  about  25  per  cent  domestic  and  75  to  80 
per  cent  export.    That  is  easily  discovered  by  going  through  the  details. 

The  Chairman.  There  are  accessible  data  from  which  the  facts  can 
be  obtained? 

Mr.  Mitchell.  Undoubtedly. 

The  Chairman.  Are  you  able  to  say  whether  a  similar  percentage 
was  carried  by  other  roads — 25  iier  cent  domestic  and  75  ])er  cent 
export? 

Mr.  Mitchell.  I  think  the  total  east-bound  movement  of  provisions 
carried  by  the  Eastern  trunk  lines  from  Chicago  is  just  about  in  the 
same  proportion.  I  think  that  is  the  consumption  as  between  export 
and  domestic. 

The  Chairman.  Is  it  your  understanding  that  of  the  total  east- 
bound  movement  by  the  trunk  lines  of  provisions  75  i^er  cent  goes 
abroad  ? 

Mr.  Mitchell.  Yes,  sir ;  I  should  say  fully. 

The  Chairman.  What  is  the  general  fact  in  that  regard  with  refer- 
ence to  dressed  meats  ? 

Mr.  Mitchell.  The  preponderance  is  in  favor  of  domestic  tonnage. 

The  Chairman.  More  than  half  of  the  dressed  meats  go  east  for 
domestic  consumption  ? 

Mr.  Mitchell.  I  should  say  so,  undoubtedly. 

The  Chairman.  And  were  the  rates  maintained  on  domestic  ship- 
ments of  dressed  meats  during  the  last  six  months  of  1901? 

Mr.  Mitchell.  No,  sir. 

The  Chairman.  You  say  the  rates  were  not  maintained  on  domestic 
shipments  of  dressed  meats  during  the  last  six  months  of  1901? 

Mr.  Mitchell.  No,  sir. 

The  Chairman.  What  was  that  rate  from  Chicago  1 


APPENDIX   G.  343 

Mr.  Mitchell.  Up  to  the  31st  of  December,  from  about  October  or 
September,  it  was  3().^  cents,  1  believe. 

The  Chairman.  On  dressed  meats? 

Mr.  Mitchell.  On  dressed  meats? 

The  Chairman.  What  was  the  published  rate? 

Mr.  Mitchell.  Forty  five  cents. 

Commissioner  Prouty.  Was  not  the  published  rate  40  cents? 

Mr.  Mitchell.  It  may  have  been  40  cents.    I  will  correct  that. 

The  Chairman,  What  was  the  fact  prior  to  October"? 

Mr.  Mitchell.  The  40-cent  rate  was  put  in,  Mr.  Commissioner,  reduc- 
ing the  rate  from  45  cents  to  meet  alleged  conditions  in  tlie  early  part 
of  the  year.    I  do  not  remember  the  date. 

The  Chairman.  Did  you  carry  any  considerable  amount  of  dressed 
meats  during  1901  that  paid  the  tariff  rate? 

Mr.  Mitchell.  1  think  not. 

The  Chairman.  Practically  all  of  it  went  at  some  secret  rate? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  Some  concession  from  the  published  tariff? 

Mr.  Mitchell,  Yes,  sir. 

The  Chairman.  Is  that  true,  as  far  as  you  have  information,  on  other 
lines? 

Mr.  Mitchell.  I  think  all  lines  and  all  packers  had  about  the  same 
rates. 

The  Chairman.  And  that  was,  generally  speaking,  about  how  many 
cents  below  the  published  tariff"? 

Mr.  Mitchell.  About  5  cents,  except  in  this  case  I  have  stated, 
wliere  it  was  6f  or  7. 

The  Chairman.  You  are  speaking  now  of  dressed  meats? 

Mr.  Mitchell.  Yes,  sir;  of  dressed  meats. 

The  Chairman.  Do  you  get  shipments  of  dressed  meats  at  any  point 
east  of  Chicago? 

Mr.  Mitchell.  You  mean  fresh  beef? 

Tiie  Chairman.  Well,  that  traffic  described  as  dressed  meats. 

Mr.  Mitchell.  We  get  practically  none;  I  think  none  at  all. 

The  Chairman.  It  would  not  be  likely  to  come  to  you  there? 

Mr.  Mitchell,  ifo,  sir.  If  you  referred  to  dressed  beef^do  you 
mean  dressed  beef  or  provisions  ? 

The  Chairman.  Dressed  beef. 

Mr.  Mitchell.  We  get  no  dressed  beef.  We  get  no  fresh  beef  that 
originates  east  of  Chicago. 

The  Chairman.  Does  that  traffic,  so  far  as  you  participate  in  it,  orig- 
inate mainly  at  Chicago? 

Mr.  Mitchell.  Chicago  and  the  Missouri  liiver. 

Commissioner  Pbouty.  Are  these  dressed  meats  carried  on  a  time 
contract  usually? 

Mr.  Mitchell.  No,  sir;  it  is  an  open  arrangement  as  a  rule,  subject 
to  notice. 

Commissioner  Prouty.  How  do  you  take  care  of  the  difference  there 
between  the  published  rate  and  the  actual  rate? 

Mr.  Mitchell.  As  1  have  described. 

Commissioner  Prouty.  By  a  refund? 

Mr.  Mitchell.  Yes,  sir. 

Commissioner  Prouty.  That  has  been  done  since  the  21st  of  July? 

Mr.  Mitchell.  No,  sir.  From  the  time  the  36^-ceut  rate  went  in,  or 
three-fourths,  which  ever  it  may  be,  it  has  been  billed  flat. 

Commissioner  Pkouty.  At  36^  ? 


344  APPENDIX   Q. 

Mr.  Mitchell.  Yes,  sir? 

Commissioner  Prouty.  The  published  rate  has  been  40 1 

Mr.  Mitchell.  It  has  horn  40. 

Commissioner  Prouty.  Tlie  actual  rate  has  been  specified  on  the 
lace  of  the  bill  of  lading? 

Mr.  Mitchell.  I  think  so. 

Commissioner  Prouty.  Tou  have  not  called  that  an  export  rate? 

Mr.  Mitchell.  No,  sir. 

I'he  Chairman.  Then,  I  understand  that  you  T|)art{cipated  in  carry- 
ing dressed  meats  for  domestic  consunii)tion  at  less  than  the  published 
rates,  and  billed  them  at  less  than  the  tariff  rates  then  in  fon;e? 

Mr.  Mitchell.  Domestic  meats  we  have — fresh  meats.  I  do  not 
know  that  we  billed  the  domestic  meats  at  less  than  the  tariff  rates. 

The  Chairman.  Your  former  statement  related  to  provisions? 

Mr.  Mitchell.  Provisions. 

The  Chairman.  And  I  understand  that  down  to  about  the  21st  of 
July  you  may  have  billed  at  the  published  rate  and  then  i)aid  a  con- 
cession in  the  way  you  describe? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  And  after  that  the  provisions  were  billed  at  a  flat 
rate? 

Mr.  Mitchell.  The  export  provisions  were. 

The  Chairman.  Whereas  in  the  case  of  dressed  meats,  you  say  they 
have  been  billed  at  the  tariff  rate  all  the  time,  or  generally  speaking? 

Mr.  Mitchell.  Yes,  sir;  I  think  they  have  been. 

The  Chaifiman.  So  dressed  meats  have  not  ordinarily  been  billed  at 
the  actual  rate? 

Mt.  Mitchell.  No,  sir. 

The  Chairman.  But  at  some  agreed  rate? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  And  the  difference  refunded  to  the  shipper? 

Mr.  Mitchell.  Yes,  sir. 

Commissioner  Fifer.  You  spoke  of  these  rates  as  secret  rates.  If 
they  are  secret  rates,  they  are  not  taken  advantage  of  by  all  shippers, 
are  they? 

Mr.  Mitchell.  I  think  they  are. 

Commissioner  Fifer.  They  are  not  very  secret  then? 

Mr.  Mitchell.  They  are  not.    Did  I  use  the  word  "  secret?" 

Commissioner  Fifer.  I  so  understood.  I  may  be  mistaken.  Were 
all  shippers  advised  of  the  reduction  in  rate  on  a  departure  from  the 
published  rate? 

Mr.  Mitchell.  On  dressed  beef? 

Commissioner  Fifer.  Yes;  wherever  there  was  a  departure? 

Mr.  Mitchell.  They  unquestionably  knew  of  it  and  shared  alike. 

Commissioner  Fifer.  Was  there  any  instance  where  one  shipper  was 
preferred  over  another? 

Mr.  Mitchell.  I  think  not. 

Commissioner  Fifer.  What  means  did  you  adopt  to  advise  your 
shippers — your  patrons — as  to  the  reduction  of  rate;  that  is,  from  the 
established  rate — the  published  rate? 

Mr.  Mitchell.  By  personal  consultation,  as  a  rule. 

Commissoner  Prouty.  What  do  you  include  in  the  term  "  provi- 
sions?" 

Mr.  Mitchell.  Salt  meats  is  what  I  understand  to  be  provisions, 
and  the  transj)orter  understands. 

Commissioner  Prouty.  In  distinction  from  fresh  meats? 


APPENDIX   G.  345 

Mr.  Mitchell.  Yes,  sir. 

Commissioner  Frouty.  Why  is  it  you  can  not  maintain  the  rate  on 
fresh  meats  as  well  as  on  salt  meats?  Yon  say  .\on  do  maintain  the 
domestic  rate  on  salt  meats?  Why  can  not  you  n)aiiitain  it  on  fresh 
meats? 

Mr.  Mitchell.  For  the  same  sentimental  reason  that  I  described  a 
moment  ago. 

Commissioner  Prouty.  Is  the  sentiment  stronger  on  fresh  meats  than 
it  is  on  salt  meats? 

Mr.  Mitchell.  Not  at  all;  but  you  understand  the  total  volume  of 
domestic  provisions  that  are  handled  by  east  bound  roads  from  Chicago 
IS  a  small  percentage. 

Commissioner  Prouty.  It  comes  to  this,  then:  There  is  so  much 
export  in  the  case  of  i)rovisions  that  you  can  cut  the  rate  on  export 
and  carry  a  man's  domestic  provisions  for  the  tariff;  whereas  on  fresh 
meats  there  is  so  little,  you  have  to  cut  the  rate  on  both.  That  is  it, 
is  it  not? 

Mr.  Mitchell.  That  is  one  way  of  putting  it. 

The  Chairman.  So  the  settlements  for  rebates  on  fresh-meat  ship- 
ments have  continued  down  to  nearly  the  present  time  in  the  manner 
you  described? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  That  is  to  say,  when  you  at  some  time  received  a 
check  which  you  deposited  in  the  bank  to  your  credit,  then  you  would 
have  a  list  of  iiersons  to  whom  you  wanted  to  make  payment.  You 
draw  your  check  on  that  bank  and  ask  them  to  give  you  drafts  on  New 
York  or  cashiers'  checks  for  certain  persons? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  And  you  take  those  and  distribute  them  to  the  per- 
sons they  belong  to? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  That  is  the  method  adopted  and  continued  on 
dressed-meat  shipments  to  the  end  of  this  year? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  And  at  the  present  time  it  is  being  donet 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  Since  when? 

Mr.  Mitchell.  First  of  January. 

The  Chairman.  Has  any  traflic  moved  since  that  time? 

Mr.  Mitchell.  Quite  considerable;  yes,  sir. 

Commissioner  Fifer.  Can  you  give  any  idea  how  many  shippers 
have  been  given  this  concession,  say  in  the  last  year,  by  your  road? 

Mr.  Mitchell.  All  shippers  that  have  used  our  road  liave  had  it. 

Commissioner  Fifer.  Can  you  give  the  number  approximately? 

Mr.  Mitchell.  1  should  say  six,  perhaps. 

Commissioner  Clements.  You  have  named  them,  have  you  not? 

Mr.  Mitchell.  Yes.  I  did  not  name  but  three,  I  think;  but  some 
of  the  minor  ones  were  using  our  road. 

Commissioner  Clements.  Who  are  they? 

Mr.  Mitchell.  The  Omaha  Packing  Company,  for  example,  and 
there  is  a  small  concern  at  Detroit. 

Commissioner  Clements.  You  said  a  month  ago  that  you  brought 
these  cut  rates  to  the  attention  of  these  i)eople  by  personal  interview. 
Do  you  vourself  see  the  representatives  of  these  shippers  and  advise 
them? 

Mr.  Mitchell.  Sometimes  I  do  and  sometimes  they  are  interviewed 
by  my  immediate  subordinates. 


346  APPENDIX    Q. 

Commissioner  Clements.  They  look  out  for  you,  too,  sometimes,  I 
guess,  looking  for  rntes.     Do  tbey  come  to  you? 

Mr.  Mitchell.  We  generally  receive  our  share  of  visits  from  them 
if  they  think  the  rates  are  being  manipulated  by  others.  It  is  a 
mutual  agreement. 

Commissioner  Clements.  They  solicit  the  best  rates  they  can  get, 
do  they"? 

Mr.  Mitchell.  Undoubtedly. 

Commissioner  Clements.  Who  are  the  individuals  you  have  dealt 
with  in  this  matter  in  regard  to  the  packing  housi  s  in  Chicago,  what 
representatives  ? 

Mr.  Mitchell.  Mr.  Mci^aughton,  of  Omaha;  Mr.  Machette,  of 
Kansas  City;  Mr.  Jenkins,  of  Chicago.  Tliere  must  be  others.  I  do 
not  happen  to  think  of  them  just  now. 

Commissioner  Clements.  How  many  of  the  Chicago  ones  did  yon 
name? 

Mr.  Mitchell.  Mr.  Jenkins. 

Commissioner  Clements.  What  house  is  hist 

Mr.  Mitchell,  Hammond  &  Co. 

Commissioner  Clements.  Who,  in  connection  with  Armour,  do  you 
deal  with? 

Mr.  Mitchell.  Mr.  Ellis,  of  the  Armour  Packing  Company,  of  Kan- 
sas City.     We  do  not  handle  Armour's  business  from  Cliicago. 

Commissioner  Clements.  Do  you  not  handle  any  of  it  from  here? 

Mr.  Mitchell.  We  have  handled  none  for  a  long  period,  to  my 
knowledge. 

Commissioner  Clements.  What  other  houses  here  besides  Armour 
and  Morris? 

Mr.  Mitchell.  We  do  not  handle  the  Morris  output. 

Commissioner  Clements.  Who  does? 

Mr.  Mitchell.  I  do  not  know. 

Commissioner  Clements.  And  Swift? 

Mr.  Mitchell.  We  handle  none  except  a  little  local  business  into 
Michigan  territory  from  Swift  &  Co. 

Commissioner  Cleivients.  Who  do  you  deal  with  as  to  that  company 
in  respect  to  what  you  do  haul? 

Mr.  Mitchell.  When  I  deal  with  them  it  is  with  Mr.  Fay. 

Commissioner  Clements.  How  are  these  payments  delivered  to 
these  respective  houses?    Are  they  mailed? 

Mr.  Mitchell.  Usually,  I  think,  through  our  local  representatives. 

Commissioner  Clements.  Handed  over  by  your  agent  to  the  house? 

Mr.  Mitchell.  Yes,  sir. 

Commissioner  Clements.  Somebody  for  each  liouse? 

Mr.  Mitchell.  Yes,  sir. 

The  Chairman.  Are  the  checks  drawn  to  the  order  of  the  principals? 

Mr.  Mitchell.  I^To,  sir. 

The  Chairman,  To  whose  order  are  they  drawn? 

Mr.  Mitchell.  Generally  the  people  with  whom  we  negotiate. 

The  Chairman.  For  instance,  if  you  had  a  transaction  with  Mr. 
Jenkins,  representing  Hammond  &  Co.,  the  check  for  the  rebate  agreed 
upon  would  be  drawn  to  his  order? 

Mr.  Mitchell.  Yes,  sir. 

Commissioner  Clements.  In  what  form  is  the  claim  put  in — as  an 
overcharge  ? 

Mr.  Mitchell.  When  you  make  the  voucher,  you  mean? 


APPENDIX   Q.  347 

Commissioner  Clements.  I  suppose  you  do  not  pay  except  some- 
body claims.  When  they  put  in  ii  claim  for  the  difference  what  is  the 
form?    Is  it  in  the  form  of  overcharge,  loss  or  damage,  or  rebate? 

Mr.  Mitchell.  An  overcharge;  in  fact,  i  do  not  know  that  it  comes 
under  any  specific  name. 

(Commissioner  Clements.  It  is  a  statement  of  the  shipment,  amount 
and  rate,  and  then  there  is  so  much  refund? 

Mr.  Mitchell.  Yes,  sir. 

Commissioner  Clements.  These  payments  of  rebates  up  to  January 
1  on  one  class  of  meat,  fresh  meat;  the  papers  have  not  been  destroyed 
in  regard  to  all  these,  have  they? 

Mr.  Mitchell.  I  think,  Mr.  Commissioner,  I  said  sometime  ago  that 
there  is  no  question  that  we  have  some  of  those  papers,  several  months 
back,  covering  dressed  meats  and  provisions. 

Commissioner  Clememts.  Well,  I  hope  you  will  keep  what  you  have. 
That  is  all. 

The  Chairman.  You  are  excused,  Mr.  Mitchell. 

Mr.  Day,  Mr.  Chairman,  Mr.  Whitney  wishes  to  know  whether  he 
may  be  excused  from  further  attendance. 

The  Chairman.  There  appears  to  be  no  reason  why  he  should  remain 
longer  unless  he  desires  to*.     He  may  be  excused. 

Mr.  Day.  I  will  call  C  C  Cochran. 

Mr.  Johnson.  As  1  stated,  Mr  Cochran  has  been  confined  to  his  bed 
since  the  24th  day  of  October,  and  is  therefore  not  present. 

Mr.  Day.  S.  B.  Knight. 

(No  response.) 

The  Chairman.  Is  anyone  here  representing  the  Wabash  road? 

(No  response.) 

Mr.  Day.  G.  B.  Spriggs. 

Mr.  Calhoun.  Mr.  Spriggs  also  is  sick.  He  has  undergone  an  opera- 
tion. I  have  a  certificate  here  from  the  doctor.  He  will  be  glad  to 
come  before  the  Commission  at  any  other  time. 

The  Chairman.  He  is  actually  confined  to  his  house  and  you  have 
the  physician's  certificate? 

Mr.  Calhoun.  Yes,  sir;  I  have  the  certificate  here. 

Mr.  Day.  I  will  call  Mr.  J.  M.  Johnson. 

J.  M.  Johnson,  being  sworn,  testified  as  follows: 

Mr.  Day.  State  your  official  relation  to  the  Rock  Island,  please. 

Mr.  Johnson.  Third  vice  president  and  freight  tratfic  manager. 

Mr.  Day.  You  have  heard  some  of  tlie  testimony  here  and  know  the 
subject  of  this  inquiry.  If  you  will  be  good  enough  to  state  what 
methods  have  prevailed  respecting  the  trans]K)rtation  of  packinghouse 
products  over  your  line  from  Kansas  City  or  irom  Missouri  River  points 
when  the  traffic  was  destined  to  Chicago  or  points  east  of  Chicago  dur- 
ing the  past — say  going  back  to  the  1st  of  July,  for  instance — the  i)eriod 
between  July  1  and  December  31,  1901? 

Mr.  Johnson.  Well,  I  suppose  you  want  a  statement  of  the  rate  con- 
ditions that  surrounded  the  movement  of  traffic? 

Mr.  Day.  Yes,  sir. 

Mr.  Johnson.  I  might  say  that  the  published  tariff  rate  on  packing- 
house products  and  dressed  beef  from  all  Missouri  River  points  is  18^ 
cents  and  23^  cents  to  Chicago.  While  we  have  moved  the  traffic  to 
Chicago  at  18J  cents,  the  special  arrangements,  you  might  say,  with 
all  packers 

Mr.  Day.  How  long  has  that  prevailed  t 


348  APPENDIX  a. 

Mr.  Johnson.  Well,  I  think  that  rate  went  in  about  the  middle  of 
June. 

Mr.  Day.  Has  it  been  maintained  at  that  rate?  Has  that  been  the 
going  rate? 

Mr.  Johnson.  I  do  not  know  of  anything  lower. 

Mr.  Day.  Has  it  fluctuated  from  time  to  time? 

Mr.  Johnson.  I  think  previous  to  that  time  there  was  3 J  cents  off 
for  a  short  period ;  I  think  the  rate  was  pretty  well  maintained  from 
the  1st  of  January  up  probably  until  March  or  April.  Then  there  was 
a  concession  of  3^  cents,  if  I  remember  correctly.  Along  in  June  the 
concession  was  made  5  cents. 

Mr.  Day.  That  prevailed  on  fresh  meats  and  packinghouse  products? 

Mr.  Johnson.  Yes,  sir.  Now  the  export  is  handled  in  an  entirely 
different  way.  You  asked  if  there  was  anything  lower.  There  may 
have  been  something  lower  on  export  provisions;  export  provisions  are 
taken  on  a  special  contract  for  each  shipment,  while  the  rate  on  domes- 
tic provisions  and  on  dressed  beef  is  taken  until  notice  is  given  that 
the  rate  is  withdrawn.  Now,  there  may  have  been  some  provisions.  I 
do  not  know  that  that  went  much  lower  than  that,  but  there  may  have 
been  some  cases  that  did  go  lower  than  13^  cents  between  the  rivers. 

Mr.  Day.  That  was  5  oft"  there? 

Mr.  Johnson.  Yes,  sir;  and  we  joined  in  whatever  was  necessary 
between  the  Mississippi  River  and  the  seaboard  lor  export. 

Mr.  Day.  This  concession,  this  rate  of  ISi  cents  from  Kansas  City  or 
the  Missouri  River  to  Chicago,  did  that  apply  on  domestic  traflic  for 
domestic  consumption  oi'  was  it  limited  to  export? 

Mr.  Johnson.  That  applied  on  domestic  as  well  as  export.  We  do 
not  know  of  any  export  dressed  beef.  We  take  it  all  the  same,  whether 
export  or  domestic. 

Mr.  Day.  What  I  have  been  endeavoring  to  ascertain  is  whether 
that  ISJ-cent  rate  to  Chicago  applied  on  provisions  for  domestic  con- 
sumption as  well  as  on  dressed  beef,  which  we  will  assume  was  for 
domestic  consumption. 

Mr.  Johnson.  I  understand  it  did. 

Mr.  Day.  Now,  you  say  if  a  concession  was  made  east  of  Chicago, 
you  joined  in  that? 

Mr.  Johnson.  I  said  east  of  the  Mississippi  River. 

Mr.  Day.  Where  it  was  brought  to  the  Mississippi  River  at  13  J  cents 
as  against  18^  cents  published,  and  the  roads  east  of  the  Mississippi 
River  would  make  a  concession  between  the  Mississippi  River  and  the 
Atlantic  seaboard,  you  would  join  in  that? 

Mr.  Johnson.  Yes,  sir. 

Mr.  Day.  How  low  a  rate  can  you  recall  at  which  provisions  or  dressed 
meats  were  carried  from  the  Missouri  River  to  the  Atlantic  seaboard? 

Mr.  Johnson.  Well,  we  do  not  make  a  through  rate  on  the  dressed 
beef.  You  might  eliminate  that.  We  make  a  through  rate  on  export 
provisions  only.  We  do  not  make  a  through  rate  on  domestic  provi- 
sions. I  mean  we  do  not  make  a  concession  on  the  through  rate  on  pro- 
visions. Our  concession  is  west  of  Chicago  entirely  or  west  of  the 
Mississippi  River.  I  have  not  personally  handled  export  provisions, 
so  I  could  not  say  what  rate  we  did  join  in  as  a  through  rate,  but  it  was 
whatever  was  going. 

Mr.  Day.  Who  did  handle  that  for  your  line? 

Mr.  Johnson.  It  was  handled  by  Mr.  Gower. 

Mr.  Day.  During  this  period,  say  1901,  what  other  concessions  were 


APPENDIX    G.  349 

made  or  participated  iu  by  y oar  line;  concessions  in  any  other  form 
than  tliose  you  noted? 

Mr.  Johnson.  No. 

Mr.  Day.  Nothing  iu  the  way  of  under  weighing t 

Mr.  Johnson.  No,  sir. 

Mr.  Day.  Underbilling? 

Mr.  Johnson.  None  whatever. 

Mr.  Day.  False  billing? 

Mr.  Johnson.  No,  sir. 

Mr,  Day.  How  was  this  cut  rate  exhibited  on  the  bill  of  lading? 
Was  it  exhibited  there?    Was  it  dune  Hat  or  fixed  up  by  voucher? 

Mr.  Johnson.  The  net  rate  on  domestic  provisions  and  ou  dressed 
beef  was  fixed  by  voucher;  that  is,  the  difPereuc  between  the  published 
tariff  rate  and  the  contract  rate  on  domestic  provisions  and  dressed 
meats  was  refunded,  while  the  export  provisions  were  handled  in  a  dif- 
ferent way,  sometimes  billed  prepaid  at  a  flat  rate  and  then  again  repaid 
the  difference  between  the  contract  rate  and  the  domestic  tariff  rate. 

Mr.  Day.  When  these  i-ebates  and  readjustments  were  made  by 
voucher  or  check  other  than  flat  billing,  through  whose  hands  did  it 
pass? 

Mr.  Johnson.  Well,  a  great  many  claims  came  to  me. 

Mr.  Day.  Were  presented  to  you  by  the  packers  or  shippers? 

Mr.  Johnson.  They  were  mailed  to  us  by  the  packers. 

Mr.  Day.  And  you  in  turn  passed  them  over  to  whom? 

Mr.  Johnson.  To  our  freight  auditing  department  for  checking. 

Mr.  Day.  Then  what? 

Mr.  Johnson.  They  were  checked  up  and  drafts  sent  to  me  for  pay- 
ment, and  I  mailed  them  to  the  packing  houses — the  packing  firms. 

JMr.  Day.  Can  you  name  some  of  the  concerns  to  whom  you  sent 
those  checks? 

Mr.  Johnson.  Well,  I  guess  almost  everybody  on  the  river.  We  did 
business  with  almost  everybody — Fowler  &  Co.,  Ruddy  Brothers, 
Cudahy,  the  Omaha  Packing  and  Provision  Company,  and  Ham- 
mond &  Co. 

Mr.  Day.  And  Swift? 

Mr.  Johnson.  And  Swift. 

Mr.  Day.  And  Armour? 

Mr.  Johnson.  We  had  very  little  from  Armour. 

Mr.  Day.  Morris? 

Mr.  Johnson.  Yes,  sir;  and  Morris. 

Mr.  Day.  Who  did  you  make  your  settlements  with — with  Morris? 

Mr.  Johnson.  I  think  the  checks  have  gone  to  the  order  of  the  Nel 
son  Morris  Packing  Company  or  the  Nelson  Morris  Company. 

Mr.  Day.  In  each  instance,  was  the  check  drawn  to  the  concern  or  to 
the  man? 

Mr.  Johnson.  I  will  not  say.  I  think,  as  a  rule,  our  checks  were 
drawn  to  the  order  of  the  packing  house. 

Mr.  Day.  What  was  the  occasion  or  reason  for  cutting  the  rate  on 
domestic  traffic? 

Mr.  Johnson.  In  order  to  meet  com])etition. 

Mr.  Day.  What  competition? 

Mr.  Johnson.  The  competition  of  other  lines. 

Mr.  Day.  From  Kansas  City  or  Missouri  River  points  to  Chicago 
and  the  Bast'^ 

Mr.  Johnson.  And  the  Bast. 

Mr.  Day.  You  do  not  mean  Gulf  competition  t 


350  APPENDIX   G. 

Mr.  Johnson.  No;  I  mean  competition  between  ourselves. 

Mr.  Day.  Is  there  any  other  reason  that  you  have  to  assign  for  that? 

Mr.  Johnson.  I  do  not  know  of  any. 

Mr.  Day.  These  checks  turned  in,  are  they  returned  to  you  or  the 
auditing  department? 

Mr.  Johnson.  I  think  they  were  not  checks;  they  were  drafts.  They 
would  go  back  to  the  bank  1  guess. 

Mr.  Day.  They  were  cashier's  drafts?  Were  they  sent  to  you  or  did 
you  procure  those? 

Mr.  Johnson.  They  were  sent  to  me. 

Mr.  Day.  Not  payable  to  your  order? 

Mr.  Johnson.  Oh,  no. 

Mr.  Day.  How  were  these  payments  noted  in  your  accounts — were 
they  as  refunds  of  overcharges? 

Mr.  Johnson.  They  do  not  go  through  our  general  accounts. 

Mr.  Day.  How  are  they  carried — in  separate  accounts? 

Mr.  tXoHNSON.  They  are  not  carried  very  long.  They  are  destroyed 
soon  afterwards. 

Commissioner  Prouty.  What  do  you  mean  by  saying  that  they  do 
not  go  in  the  general  account? 

Mr.  Johnson.  I  suppose  they  go  through  the  treasury.  I  mean  they 
do  not  go  through  the  freight  auditor's  account  in  the  ordinary  way  of 
an  overcharge  claim. 

The  Chairman.  There  must  be  an  entry  on  the  books  of  your  com- 
pany somewhere  corresponding  to  the  amount  drawn  out  for  this 
purpose. 

Mr.  Johnson.  I  su])pose  there  is  in  the  treasury  department. 

The  Chairman.  What  that  entry  is,  you  do  not  kuow? 

Mr.  Johnson.  No;  I  do  not  know  anything  about  that. 

Mr.  Day.  You  do  not  know  what  evidence  is  preserved  in  the  books 
of  the  company — the  auditor's  or  treasurer's — as  to  the  disbursement 
of  these  moneys,  how  they  are  chari^ed? 

Mr.  Johnson.  I  could  not  say.     1  never  went  into  that. 

The  Chairman.  I  inler  that  you  in  some  way  are  furnished  from  the 
treasury  of  your  company  with  wliarever  money  is  necessary  to  meet 
the  contracts  you  have  made  up  to  this  time? 

Mr.  Johnson.  I  would  not  like  to  put  it  just  that  way.  They  come 
to  me  in  the  shape  of  drafts,  those  that  I  handle  personally.  Those  that 
Mr.  Gower  handles,  1  suppose  come  to  him  in  the  same  way.  The 
claims  come  in,  and  are  checked  up  and  a  statement  made  of  the  amount 
and  a  draft  is  received  for  that  amount  and  my  clerk  mails  it  to  the 
proper  party. 

The  Chairman.  You  receive  directly,  and  in  the  first  instance  from 
presumably  the  treasurer  of  your  company  these  drafts  made  out  to 
the  diflerent  parties  to  whom  rebates  are  due? 

Mr.  Johnson.  They  come  to  me  that  way. 

The  Chairman.  And  you  simply  hand  them  over  or  mail  themt 

Mr.  Johnson.  Mail  them. 

The  Chairman.  You  do  not  conduct  the  matter  as  Mr.  Mitchell  does 
of  the  Michigan  Central? 

Mr.  Johnson.  No. 

Commissioner  FiFER.  Do  you  mail  these  drafts  to  the  man,  the 
individual? 

Mr.  Johnson.  My  recollection  is  that  they  are  drawn  as  a  rule  to 
the  house.  I  do  not  recall  any  being  drawn  to  the  order  of  an  individ- 
ual. There  may  be  cases  of  that  kind,  but  I  would  not  like  to  say  as 
to  that. 


APPENDIX   G.  351 

Commissioner  Clements.  Are  tlie  claims  made  by  the  house? 

Mr.  Johnson.  They  generally  come  to  us  as  a  statement  of  billing. 

Commissioner  Clements.  From  whom — Swift  &  Co.  or  some  indi- 
vidual ? 

Mr.  Johnson.  It  would  be  Swift  &  Co.'s  envelope  and  by  checking 
up  we  know  what  business  it  is. 

Commissioner  Clements.  Is  there  any  communication  in  it  signed 
by  anybody? 

Mr.  Johnson.  No  communication. 

Commissioner  Clements.  You  know  what  it  relates  to? 

Mr.  Johnson.  If  it  is  my  arrangement  I  know  what  it  relates  to. 

Commissioner  Clements.  You  have  talked  it  over  beforehand  with 
the  representatives  of  these  houses? 

Mr.  Johnson.  If  we  have  an  arrangement  with  them,  we  have. 

Commissioner  Clements.  How  much  have  you  paid  iu  the  last  year 
in  that  way  to  all  of  them  ? 

Mr.  Johnson.  Well,  I  have  no  idea. 

Commissioner  Clements.  Have  not  you  a  pretty  accurate  idea? 

Mr.  Johnson.  I  have  not  the  slightest  idea.  We  keep  no  record  of 
it  and  do  not  charge  our  minds  with  it. 

Commissioner  Clements.  I  know,  but  this  is  a  pretty  important 
business.  Looking  at  revenues  and  rates  and  things  of  that  kind,  I 
suppose  you  get  very  familiar  with  a  serious  matter  like  this  so  as  to 
know  whether  it  is  $5,000  or  $100,000  a  year? 

Mr.  Johnson.  I  know  it  is  over  live.  I  know  it  is  as  much  as  five 
sometimes  in  a  month. 

Commissioner  Fifer.  To  one  individual? 

Mr.  Johnson.  I  do  not  think  we  pay  $5,000  to  one  individual  in  a 
month. 

Commissioner  Clements.  How  much  have  you  paid  to  any  one  of 
them  iu  a  year  ? 

Mr.  Johnson.  1  could  not  say. 

Commissioner  Clemen'J'S.  Have  not  yon  any  idea? 

Mr.  Johnson.  I  have  not  the  slightest. 

Commissioner  Clements.  Who  have  you  talked  to  about  these  mat- 
ters and  arranged  with  about  these  matters — what  individual? 

Mr.  Johnson.  Well,  there  are  different  men  in  charge  of  the  traffic  of 
the  different  houses. 

Commissioner  Clements.  Each  one  has  a  traffic  man  that  looks  out 
for  these  things,  and  that  is  the  man  you  deal  with? 

Mr.  Johnson.  Yes,  sir. 

Commissioner  Clements.  Can  you  name  some  of  them,  the  Individ 
uals  of  these  houses  ? 

Mr.  Johnson.  Well,  I  have  had  some  talk  with  Mr.  Taylor  of 
Morris  &  Co.,  Mr.  Fay  of  Swift  &  Co. 

Commissioner  Clements.  And  Armour? 

Mr.  Johnson.  We  have  had  very  little  with  Armour.  What  busi- 
ness we  had  with  Armour  was  through  Mr.  Ellis. 

Commissioner  Clements.  And  Hammond  &  Co.? 

Mr.  Johnson.  Mr.  Jenkins. 

Commissioner  Clements.  Cudahy? 

Mr.  Johnson.  Mr.  McNaughton. 

Commissioner  Clements.  And  any  others? 

Mr.  Johnson.  Mr.  Urquhart,  of  the  Omaha  Packing  Company, 

Commissiouer  Clements.  And  Schwarzschild  &  Sulzberger? 

Mr.  Johnson.  Mr.  Machette. 


352  APPENDIX   G. 

Commissioner  Clements.  Take  one  of  these  transactions  and  tell  us 
what  evidence  there  is  now  in  your  boolvs  or  papers  of  the  transaction. 
A  claim  is  filed.  The  communication — this  statement  conies  from  the 
house,  for  instance,  in  an  envelope.  You  take  that  and  check  it  up. 
Then  where  does  it  go'^ 

Mr.  JoiiNSJON.  I  think  it  is  destroyed. 

Commissioner  Clements.  And  upon  some  sort  of  memorandum  a 
check  is  drawn? 

Mr.  Johnson.  It  is  not  destroyed  until  checked  up  with  the  billing, 
the  file  in  the  office;  then  the  statement  is  made  from  the  claim  as 
filed.  The  draft  is  drawn  and  then  the  papers  are  destroyed,  as  I 
understand. 

Commissioner  Clements.  Why  are  they  destroyed? 

Mr.  Johnson.  Simply  for  the  purpose  of  destroying  any  evidence 
there  may  be. 

Commissioner  Clements.  Is  there  no  entry  on  a  book  that  so  much 
money  has  gone  into  your  treasury  and  some  of  it  comes  out? 

Mr.  Johnson.  That  is  a  matter  with  the  Treasury  Department.  I 
do  not  know  anything  about  that. 

Commissioner  Clements,  You  do  not  know  what  entries  are  made 
about  it? 

Mr.  Johnson.  No;  I  do  not. 

Commissioner  Clements.  All  the  papers  you  know  about  or  entries 
that  you  are  familiar  with  are  destroyed? 

Mr.  Johnson.  I  understand  they  are  all  destroyed. 

Commissioner  Clements.  Have  you  not  any  recent  ones? 

Mr.  Johnson.  I  do  not  think  they  are  more  than  thirty  days'  old. 

Commissioner  Clements.  You  think  that  all  up  to  within  thirty 
days  are  destroyed  ? 

Mr.  Johnson.  That  is  the  rule,  or  custom. 

Commissioner  Clements.  Is  it  probable  you  have  some  that  are  not 
yet  destroyed  ? 

Mr.  Johnson.  It  may  be.  There  may  be  some  that  have  just  been 
filed. 

Commissioner  Clements.  Well,  is  that  practice  still  going  on  of 
paying  these  claims? 

Mr.  Johnson.  The  old  ones. 

Commissioner  Clements.  You  are  paying  the  old  ones? 

Mr.  Johnson.  Yes,  sir;  nothing  has  been  filed  since  the  1st  of  Jan- 
nary. 

Commissioner  Clements.  Nothing  filed  since  then? 

Mr.  Johnson.  No,  sir. 

Commissioner  Clements.  You  mean  nothing  in  reference  to  a  ship- 
ment since  then? 

Mr.  Johnson.  Yes,  sir;  that  is  what  I  should  say,  since  January  1. 

Commissioner  Clements.  Has  there  been  any  arrangement  to  allow 
on  shipments  since  the  1st  of  January? 

Mr.  Johnson.  I  can  not  say  there  has  been  any  arrangement. 

Commissioner  Clements.  Has  the  old  arrangement  been  broken  up? 

Mr.  Johnson.  It  is  understood  that  everything  expired  with  Decem- 
ber 31, 1001.  I  might  say  in  explanation  that  it  is  generally  understood 
with  the  lines  between  the  Missouri  Kiver  and  Chicago  that  there  is  an 
arrangement  at  less  than  the  tariff  between  the  Missouri  River  and 
Chicago,  and  all  roads  that  engage  in  the  packing  house  business  will 
have  to  meet  it  if  they  do  any  business. 

Commissioner  Clements.  Who  makes  that  arrangement? 


APPENDIX   G.  353 

Mr.  Johnson.  I  think  that  will  develop  probably  in  the  hearing 
when  you  get  the  proper  man  on  the  stand. 

Commissioner  Clements.  Is  it  your  road? 

Mr.  Johnson.  No,  sir;  not  the  Eock  Island. 

Commissioner  Clements.  Do  you  know  who  it  is? 

Mr.  Johnson.  Yes,  I  think  I  do;  but  I  would  prefer  not  to  answer, 
because  I  think  you  can  get  it  direct  from  the  party  who  is  interested. 

Commissioner  Clements.  Well,  can  you  not  furnish  us  a  statement 
covering  all  of  last  year's  shipments,  showing  each  shipment  and  the 
amount  of  the  rebate  paid  and  to  whom  paid? 

Mr.  Johnson.  I  think  that  would  be  very  doubtful.  I  might  be  able 
to  furnish  you  the  amount  of  money  paid  to  different  persons,  but  I 
doubt  if  we  could  give  a  statement  of  shipments.  I  think  the  papers 
have  been  destroyed. 

Commissioner  Clements.  Could  you  furnish  the  amount  paid  to 
each  house? 

Mr.  Johnson.  I  think  likely  I  could,  not  positively. 

Commissioner  Clements.  Could  you  furnish  a  statement  showing 
what  other  roads  besides  you  participated 

Mr.  Johnson.  Nobody  participated  with  us  unless  it  was  some  ship- 
ment of  export  taken  on  contract  from  the  Missouri  River.  In  that 
case  we  did  participate  with  our  connections  East.  That  business  is 
small  compared  with  the  other. 

Commissioner  Proxjty.  Suppose  you  had  been  compelled  to  publish 
a  rate  of  18^  cents  from  the  Missouri  River  to  Chicago,  do  you  think 
that  rate  would  have  been  maintained? 

Mr.  Johnson.  Do  I  think  the  18J  cents — well,  I  do  not  know. 

Commissioner  Prouty.  What  is  the  reason  you  can  not  maintain  a 
published  rate  the  same  as  a  rate  that  is  not  ])ublished?  You  grad- 
ually drift  down  to  a  rate  of  18i  cents  and  maintain  that  rate? 

Mr.  Johnson.  Yes,  sir;  that  is  true.    We  get  to  a  lower  level? 

Commissioner  Prouty.  Suppose  you  started  with  a  published  rate 
on  that  lower  level,  do  you  think  you  would  maintain  that  rate? 

Mr.  Johnson.  We  would  for  a  short  time,  but  I  am  afraid  it  would 
be  cut. 

Commissioner  Prouty.  Who  do  you  think  gets  the  benefit  of  these 
cuts — the  packer? 

Mr.  Johnson.  The  dear  public  gets  the  benefit  of  it.  They  get  the 
benefit — from  the  man  that  raises  the  calf  to  the  millionaire  that  eats 
the  steak. 

Commissioner  Prouty.  You  do  not  think  that  the  millionaire  that 
kills,  packs,  and  ships  it  gets  any  part  of  it? 

Mr.  Johnson.  No;  I  think  he  gives  it  all  away. 

Commissioner  Fifer.  Is  it  not  true  that  a  few  men,  these  large 
shippers,  force  the  railroads  to  cut  the  rate,  depart  from  the  published 
rate,  and  when  they  get  it  down  to  where  they  are  satisfied  things  go 
along  smoothly? 

Mr.  Johnson.  I  would  not  like  to  say  that  that  is  a  fact. 

Commissioner  Fifer.  Don't  you  kind  of  think  it  is  the  fact? 

Mr.  Johnson.  No,  sir;  I  think  once  in  a  while  a  weak  sister  gives 
away,  and  we  all  follow. 

Commissioner  Fifer.  Yes;  but,  as  suggested  by  Commissioner 
Prouty,  it  seems  that  you  can  maintain  this  rate  that  is  irregular  when 
it  gets  down  to  a  certain  point,  and  yet  it  seems  impossible  to  maintain 
the  published  rate.  Is  not  that  brought  about  by  reason  of  the  fact 
that  a  few  men  compel  the  roads  to  cut  the  rate,  and  when  it  is  down 

74lA— 05 23 


354  APPENDIX    Q. 

to  a  point  where  they  get  an  advantage  it  satisfies  them  ana  the  mattei 
runs  along  smoothly"? 

Mr.  Jt)HNSON.  I  do  not  think  they  can  compel  the  roads.  They  could 
not  compel  them  if  they  had  a  way  of  standing  together. 

Commissioner  Fifeb.  Well,  the  roads  do  not  do  this  voluntarily,  do 
they? 

Mr.  Johnson.  They  do  it,  they  say,  in  order  to  protect  themselves. 

Commissioner  Fifer.  1  do  not  mean  when  I  say  "  comi)el " — I  do  not 
mean  they  do  it  by  physical  violence,  but  they  do  it  in  other  ways. 

Mr.  Johnson.  1  would  not  like  to  say.  They  may  find  a  road  once  in 
a  while  that  is  willing  to  do  something  to  get  their  share  of  the  business. 

Commissioner  Fifer.  They  play  one  road  against  the  other,  do  they 
not? 

Mr.  Johnson.  I  would  not  say  that.  They  are  seeking  the  best  rate, 
and  sometimes  they  find  somebody  that  wants  to  increase  their  carry- 
ing, and  then  the  others  follow  in  a  short  time. 

The  Chairman.  It  appears  that  the  actual  rate  has  been  5  or  6  cents 
below  the  published  rate? 

Mr.  Johnson.  Five. 

The  Chairman.  Does  any  shipper  or  any  packer  have  any  assurance 
that  he  will  continue  to  get  that  rate  from  mouth  to  month  or  week  to 
week  ? 

Mr.  Johnson.  I  think  not;  no.  As  a  rule  it  is  a  temjjorary  arrange- 
ment. 

The  Chairman.  Do  you  think  any  farmer  gets  a  cent  more  for  the 
animal  he  raises  on  account  of  that  rebate? 

Mr.  Johnson.  Yes,  sir;  I  think  it  increases  the  price  of  the  cattle. 

The  Chairman.  The  packer  has  no  assurance  that  he  will  get  it  back, 
has  he? 

Mr.  Johnson.  He  is  iiretty  sure  he  will  get  it  that  month. 

The  Chairman.  And  you  think  he  pays  more? 

Mr.  Johnson.  I  think  it  has  an  influence  in  establishing  the  market 
on  stock  in  the  yards. 

Tlie  Chairman.  And  that  the  packer  himself  does  not  make  any  more 
than  if  he  paid  the  published  rate? 

Mr.  Johnson.  I  do  not  believe  they  do.  Their  competition  is  so  severe 
that  1  think  they  give  away  all  they  get  in  the  way  of  rebates,  the  same 
as  the  grain  man  does  in  the  grain. 

The  Chairman.  Is  the  published  rate  too  hight 

Mr.  Johnson.  I  think  it  is  too  low. 

The  Chairman.  Then  the  actual  rate  must  be  extremely  low? 

Mr.  Johnson.  Very  low.  We  do  not  find  any  profit  whatever  in  the 
business  from  Kansas  City  to  Chicago. 

Commissioner  Fifer.  What  business?  You  mean  this  particular 
traffic? 

Mr.  Johnson.  This  particular  traffic,  dressed  beef  and  provisions. 

Commissioner  Pboiity.  Are  the  rebates  on  live  stock  maintained? 

Mr.  Johnson.  Yes;  I  understand  they  are.  I  want  to  explain  that 
answer.  There  is  no  live  stock  that  originates  in  Kansas  City.  The 
stock  all  comes  in  there  from  some  western  point — some  jioint  east  or 
west.  The  stock  is  carried  out  of  Kansas  City  at  what  we  call  the 
remainder  of  the  rate,  and  in  that  way  the  through  rate  to  destination 
from  ])oint  of  shipment  is  preserved. 

Commissioner  Prouty.  That  is  all. 

The  Chairman,  Any  further  questions! 


APPENDIX  a.  355 

Mr.  Day.  In  the  year  1901  did  you  luive  a  contract  with  any  shipper, 
any  packing-bouse  company  or  concern? 

Mr.  Johnson.  Not  with  any  shipper. 

Mr.  Day.  Or  agreemeot  to  put  in  a  certain  rate  or  carry  this  trafific 
at  a  fixed  rate  for  a  certain  time? 

Mr.  Johnson.  We  agreed  to  make  the  same  rate  our  competitors  made. 

Mr.  Day.  Nothing  binding  on  you  beyand  the  day? 

Mr.  Johnson.  Well,  beyond  the  month,  I  might  say.  It  was  not 
renewed  every  mouth.  It  was  understood  that  it  would  run  along 
until  canceled. 

Mr.  Day.  What  were  the  terms  of  that  understanding? 

Mr.  Johnson.  Simply  an  understanding  that  we  would  carry  at  18.J 
cents  to  Chicago. 

Mr.  Day.  During  the  pendency  of  that  contract  if  your  competitors 
reduced  the  rate 

Mr.  Johnson.  We  would  restore  it. 

Mr.  Day.  At  once? 

Mr,  Johnson.  At  once. 

Mr.  Day.  Such  were  the  terms  of  the  agreement! 

Mr.  Johnson.  That  was  the  understanding. 

Mr.  Day.  Have  you  a  contract  for  this  year? 

Mr.  Johnson.  No,  sir. 

Mr.  Day.  Have  any  of  the  lines? 

Mr.  Johnson.  There  is  rumor.    I  can  not  say  except  from  rumor. 

Mr.  Day.  What  was  the  lowest  you  carried  packinghouse  products  at  ? 

Mr.  Johnson.  Thirteen  and  a  half  cents, 

Mr.  Day.  Why  did  the  rate  not  go  below  that? 

Mr.  Johnson.  1  do  not  know  but  it  did  by  some  lines.  We  put  that 
as  a  minimum. 

Mr.  Day.  Why  did  you  put  that  as  a  minimum? 

Mr.  Johnson.  We  thought  there  was  no  protit  at  a  lower  figure. 

Mr.  Day.  You  say  there  is  a  rumor  abroad  that  there  is  a  prospect- 
ive contract  or  a  contract  for  the  current  month,  is  it,  or  for  a  time? 

Mr.  Johnson.  I  think  it  is  for  a  period.  I  can  not  say  how  long. 
As  long  as  I  did  not  make  the  contract,  1  can  not  swear  to  it. 

Mr.  Day.  What  is  the  rate? 

Mr.  Johnson.  Eighteen  and  a  half  cents  to  Chicago. 

Mr.  Day.  Is  that  with  more  than  one  packing  concern  or  with  one? 

Mr.  Johnson.  I  could  not  say  about  that. 

Mr.  Day.  What  is  your  information  ? 

Mr.  Johnson,  I  say  we  have  a  rumor  that  one  line  has  an  engage- 
ment at  18J  cents.  I  think  you  will  probably  develop  that  during  the 
afternoon. 

Mr.  Day.  That  is  all. 

The  Chairman.  You  are  excused,  Mr.  Johnson. 

Mr.  Day.  There  is  anotlier  question,  Mr.  Johnson,  I  want  to  ask  you. 
Is  it  your  understanding  that  that  contract  was  made  subsequent  to 
the  holidays? 

Mr.  Johnson.  No,  sir. 

Mr.  Day.  It  is  an  old  contract! 

Mr.  Johnson.  I  think  so. 

Mr.  Day.  Continuing  overt 

Mr.  Johnson.  I  think  so. 

Mr.  Day.  That  is  all. 

The  witness  was  excused. 

Mr.  Day.  I  will  call  Mr.  Miller,  of  the  BurlingtoiL 


356  APPENDIX   G. 

Thomas  Miller,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  State  your  name  and  official  relations  to  the  Burlington 

road. 

Mr.  MiLLEK.  Thomas  Miller,  general  freight  agent,  C,  B.  &  Q. 

Mr.  Day.  What  is  the  scope  of  your  functions  on  the  Burlington? 

Mr.  Miller.  I  have  charge  in  freight  matters  on  what  is  known  as 
the  O.,  B.  &  Q.  proper  from  Chicago  to  the  Missouri  River  and  St.  Paul. 
It  does  not  go  to  the  Southwest — to  Kansas  City. 

Mr.  Day.  Your  jurisdiction  does  not? 

Mr.  Miller.  No,  sir. 

Mr.  Day.  Who  has  charge  of  that? 

Mr.  Miller.  That  belongs  to  our  Missouri  River  lines.  Mr.  Ives  is 
the  agent. 

Mr.  Day.  Who  is  your  superior  in  regard  to  traffic  on  the  Burlington? 

Mr.  Miller.  Well,  in  the  past  my  superior  has  been  our  general 
manager.     Since  the  1st  of  January  it  has  been  changed. 

Mr.  Day.  Who  was  your  general  manager  the  last  two  months  of  the 
year? 

Mr.  Miller.  F.  A.  Delano. 

Mr.  Day.  Who  is  now? 

Mr.  Miller.  Mr.  D.  Miller.  He  is  vice-president,  in  charge  of  traffic 
for  the  entire  Burlington  system. 

Mr.  Day.  And  the  southern  point  over  which  you  have  jurisdiction 
is  what  point  on  the  IMissouri  River — the  most  southerly? 

Mr.  IMiLLER.  Well,  we  have  everything  north  of  St.  Joseph. 

Mr.  Day.  Were  you  here  this  morning? 

Mr.  Miller.  I  was. 

Mr.  Day.  You  heard  the  testimony  here  to-day? 

Mr.  Miller.  Yes,  sir. 

Mr.  Day.  And  know  the  scope  of  this  inquiry? 

Mr.  Miller.  Yes,  sir. 

Mr.  Day.  Will  you,  without  taking  up  the  time  of  having  me  specifi- 
cally interrogate  you,  state  to  the  Commission  what  conditions  prevailed 
on  that  i)ortion  of  the  Burlington  over  which  you  had  jurisdiction  dur- 
ing 1901,  particularly  commencing  with  the  1st  of  July,  1901,  speaking 
of  packing-house  products? 

Mr.  Miller.  I  think  since  July  15  the  rate  on  packing-house  prod- 
ucts has  been  18i  cents  to  Chicago;  dressed  beef  the  same.  Prior  to 
that,  from  the  1st  of  April,  it  was  3  cents,  and  Irom^  January  until  April 
we  got  our  tariff  rate. 

Mr.  Day.  From  January  to  April,  1901,  you  got  your  tariff  rate? 

Mr.  Miller.  That  is  my  recollection. 

Mr.  Day.  After  April  you  gave  a  concession  of  3  cents  ? 

Mr.  Miller.  Yes,  sir. 

Mr.  Day.  And  since  then  it  has  been  18J  cents,  whether  export  or 
domestic? 

Mr.  Miller.    That  is  right. 

Mr.  Day.  That  applied  to  Chicago  t 

Mr.  Miller.  Yes,  sir. 

Mr.  Day.  On  traffic  destined  to  the  Atlantic  seaboard  was  there  any 
difference  in  the  concession? 

Mr.  Miller.  We  joined  in  any  rate  made  by  Eastern  lines  east  of 
the  Mississippi  River. 

Mr.  Dav.  What  is  the  lowest  rate  you  recall  prevailing  on  packing- 
house products  from  the  Missouri  River  to  New  York  and  the  seaboard? 


APPENDIX   G.  357 

Mr.  Miller.  I  tliink  it  was  45  cents  from  the  Missouri  Eiver  to  the 
Atlantic  seaboard. 

Mr.  Day.  That  was  the  lowest  rate  from  the  Missouri  River  ? 

Mr.  Miller.  That  was  the  lowest  I  recall.  We  did  not  participate 
in  those  low  rates,  speaking  for  our  own  line. 

Mr.  Day.  Have  you  any  information  that  traffic  was  carried  by  your 
road — this  particular  traffic  we  are  inquiring  into  here — at  false 
weights  ? 

Mr,  Miller.  Never. 

Mr.  Day.  No  underbilling  1 

Mr.  Miller.  There  never  has  been  an  ounce  of  trafflc  nnderbilled 
on  the  Burlington  of  any  description. 

Mr.  Day.  Any  other  shrinkage  except  in  the  rate  itself  in  regard  to 
packinghouse  products  or  dressed  meats  ? 

Mr.  Miller.  Never. 

Mr.  Day.  How  about  cattle  ? 

Mr.  Miller.  Just  the  same. 

Mr.  Day.  Was  this  traffic  billed  out  from  Missouri  River  points  to 
Chicago  or  for  the  Atlantic  seaboard  billed  flat,  or  was  it  billed  at  the 
tariff? 

Mr.  Miller.  At  the  published  tariff. 

Mr.  Day.  How  are  the  differences  made  up?  How  is  the  refund  or 
rebate  paid  ? 

Mr.  Miller.  By  voucher. 

Mr.  Day.  Just  state  briefly  the  course  of  procedure,  the  formula? 

Mr.  Miller.  We  receive  a  statement  giving  reference  to  the  billing 
of  the  freight — no  regular  claim  is  made  up — and  that  is  checked  and 
a  voucher  made  for  the  amount. 

Mr.  Day.  Checked  by  whom? 

Mr.  Miller.  The  freight  auditor.  He  knew  nothing  about  the 
transaction. 

Mr.  Day.  The  claim  first  went  to  him? 

Mr.  Miller.  To  me. 

Mr.  Day.  And  you  transmitted  it  to  the  auditor? 

Mr.  Miller.  I  took  it  to  them  and  had  it  checked. 

Mr.  Day.  How  was  it  disbursed — by  check? 

Mr.  Miller.  Check. 

Mr.  Day.  Payable  to  whom? 

Mr.  Miller.  It  was  different — sometimes  to  the  traflSc  manager  and 
sometimes  direct  to  the  principal. 

Mr.  Day.  You  mean  the  traflfic  manager  of  the  packing  house  ? 

Mr.  Miller.  Yes,  sir. 

Mr.  Day.  Under  what  circumstances  were  checks  made  payable  to 
the  traffic  manager? 

Mr.  Miller.  I  know  what  firms  were  handled  that  way. 

Mr.  Day.  What  firms? 

Mr.  Miller.  At  Omaha,  I  think  the  Omaha  Packing  Company;  I 
think  it  was  paid  to  Mr.  TJrquhart.  For  Swift  &  Company,  to  Mr.  Fay. 
I  do  not  remember  how  it  was  as  to  Armour  &  Company. 

Mr.  Day.  How  about  Morris  ? 

Mr.  Miller.  He  has  no  packing  house  there. 

Mr.  Day.  Did  you  carry  any  for  Morris? 

Mr.  Miller.  From  St.  Joseph. 

Mr.  Day.  How  was  it  settled  there? 

Mr.  Miller.  I  settled  that,  although  it  did  not  come  under  my 
jurisdiction,  with  Mr.  Taylor. 


J358  APPENDIX   G. 

Mr.  Day.  He  is  his  traffic  man? 

Mr.  MiLLEE.  Yes,  sir. 

Mr.  Day.  Did  you  give  the  check  in  Mr.  Taylor's  name? 

Mr.  Miller.  In  Mr.  Taylor's  name. 

Mr.  Day.  Do  you  draw  your  own  check?  » 

Mr.  Miller.  No,  sir;  the  company's  check. 

Mr.  Day.  How  are  these  disbursements  carried  on  the  books  of  your 
company? 

Mr.  Miller.  I  do  not  know. 

Mr.  Day.  Is  the  check  drawn  in  your  favor  in  the  first  instance? 

Mr.  Miller.  jSTo,  sir. 

Mr.  Day.  The  company's  check  is  sent  to  you? 

Mr.  Miller.  Yes,  sir;  on  a  voucher  approved  by  me. 

Mr.  Day.  And  you  send  the  check  to  Mr.  Taylor? 

Mr.  Miller.  Yes,  sir;  mail  it  to  him. 

Mr.  Day.  Did  you  have  a  contract  covering  any  period  of  1901? 

Mr.  Miller.  No,  sir. 

Mr.  Day.  A  contract,  agreement,  or  understanding? 

Mr.  Miller.  No  understanding  that  lasted  overnight. 

Mr.  Day.  Have  you  any  now? 

Mr.  Miller.  No,  sir. 

Mr.  Day.  Are  published  tariffs  being  maintained  on  these  products 
now? 

Mr.  Miller.  They  are  supposed  to  be. 

Mr.  Day.  What  do  you  think  about  it? 

Mr.  Miller.  Mr.  Johnson  made  reference  to  something  that  I  did 
that,  so  far  as  your  knowledge  or  information  goes,  the  only  concession 
not  know  anything  about.     I  heard  the  same  rumor. 

Mr.  Day.  Do  you  wish  tlie  Commission  to  understand  you  as  stating 
that,  so  far  as  your  knowledge  or  information  goes,  the  only  form  of 
concession  made  by  your  road — that  portion  under  your  jurisdiction — 
during  1901  you  have  stated  to  them? 

Mr.  Miller.  Yes,  sir. 

Mr.  Day.  That  is  all. 

Commissioner  Clements.  Is  your  road  the  one  that  Mr.  Johnson 
meant,  do  you  think? 

Mr.  Miller.  No,  sir ;  the  Burlington  road  never  tried  to  contract 

Commissioner  Clements.  I  do  not  know  that  he  meant  a  contract. 
How  much  has  been  i)aid  in  1901  in  rebates? 

Mr.  Miller.  I  have  not  any  idea. 

Commissioner  Clements.  Could  you  not  approximate  it? 

Mr.  Miller.  No,  sir;  I  can  ascertain  and  let  you  know. 

Commissioner  Clements.  I  did  not  know  but  you 

Mr.  JMiLLER.  If  you  want  that  information,  if  it  is  possible  for  me  to 
get  it  I  will  do  so  and  give  it  to  you. 

Commissioner  Clements.  I  did  not  know  but  that  you  knew  these 
things  in  the  general  run  of  your  business  and  could  give  us  some  idea. 
You  can  give  us  a  statement  showing  the  tonnage  of  the  shipments, 
the  freight  collected,  the  amount  paid  back,  and  to  whom  paid? 

Mr.  Miller.  I  do  not  know  whether  I  can  or  not.  If  you  want  it 
and  I  can  furnish  it,  I  will  do  it. 

Commissioner  Clements.  We  want  it,  and  if  you  can  not  furnish  it, 
we  would  like  to  know  why. 
Mr.  I\Iiller.  All  right,  sir. 
The  Chairman.  That  seems  to  be  alL 
Witness  was  excused. 


APPENDIX    G.  359 

Mr.  Day.  I  wiil  call  Mr.  Stohr. 

Mr.  Kellogg.  When  Mr.  Stolir  received  your  notice  he  was  on  the 
Paciiio  coast  aud  had  not  time  to  get  back.  He  will  come  before  the 
Commission  at  any  time  you  desire.  It  was  not  possible  foi  him  to  get 
here  yesterday,  to  day,  or  to-morrow. 

The  Chairman.  When  did  he  leave  for  the  Pacific  coast? 

Mr.  Kellogg.  A  week  ago  last  Saturday,  I  think.  Mr.  Stohr  is  a 
man  who  never  keeps  out  of  the  way.  He  will  come  here  if  you  want 
him. 

The  Chairman.  If  his  attendance  is  required  he  will  come  to  Wash- 
ington or  such  place  as  we  designate? 

Mr.  Kellogg.  Yes,  sir. 

Mr.  Day.  I  will  call  Mr.  Wann. 

Fred  A.  Wann,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  Please  give  your  name  and  relations  to  the  Chicago  and 
Alton. 

Mr.  Wann.  Fred  A.  Wann ;  general  freight  agent. 

Mr.  Day.  How  long  have  you  been  general  freight  agent  of  that 
road? 

Mr.  Wann.  A  little  over  five  years. 

Mr.  Day.  Who  is  your  superior  oflBcer  in  the  traffic  department? 

Mr.  Wann.  Our  president. 

Mr.  Day.  You  have  no  traffic  manager,  so-called? 

Mr.  Wann.  No,  sir. 

Mr.  Day.  Have  you  been  here  all  during  the  day? 

Mr.  Wann.  All  day;  yes,  sir. 

Mr.  Day.  Please  go  ahead  and  tell  the  Commission  in  what  respect 
your  road  has  made  concessions  Irom  the  published  tariff's  in  the  trans- 
portation of  packing  house  products  and  fresh  meats  from  Missouri 
Elver  points  to  the  Mississippi  River,  and  from  the  Mississippi  River 
to  Chicago  or  points  east  of  Chicago,  during  the  year  1901,  or  subse- 
quent to  July  1. 

Mr.  Wann.  The  first  three  months  we  got  tariff'  rates  on  dressed  beef 
and  packinghouse  products.  I  should  say  three  months,  it  may  be 
three  and  a  half — about  that  time.  Then  we  were  approached  and  told 
that  there  was  3  cents  being  used  on  packing-house  products. 

Mr.  Day.  A  concession  of  3  cents  from  the  published  rate? 

Mr.  Wann.  Yes,  vsir.  Then,  I  should  say  the  latter  part  of  May  or 
June,  5  cents  on  fresh  meats  and  packing-house  products  from  Kansas 
City.     That  is  where  our  provisions  come  from  to  Chicago  and  the  East. 

Mr.  Day.  What  did  you  do  when  you  heard  that? 

Mr.  Wann.  We  did  not  haul  any  jn'ovisions  from  July  until  the  latter 
part  of  October.    In  October  we  met  the  5  cents. 

Mr.  Day.  You  mean  to  say  that  from  July  until  some  time  in  October 
on  all  traffic  you  carried  you  collected  and  retained  the  published  rate? 

Mr.  Wann.  I  do  not  think  we  hauled  five  cars,  during  that  time,  of 
packing-house  i)roducts. 

Mr.  Day.  How  about  dressed  meats? 

Mr.  Wann.  Dressed  meats  we  hauled  from  seven  to  ten  cars. 

Mr.  Day.  What  concession  did  you  make  on  dressed  meats? 

Mr.  Wann.  We  simply  stated  that  if  we  found  later  that  our  com- 
petitors were  making  this  5  cents  we  would  protect  them,  which  we  did. 

Mr.  Day.  In  the  first  case  you  collected  the  published  tariff? 

Mr.  Wann.  Yes,  sir. 

Mr.  Day.  And  subsequently  made  a  refund  of  the  difference  between 
the  jjublished  rate  and  what  rate — 18 J  cents? 


360  APPENDIX   G. 

Mr.  Wann.  Eighteen  and  a  half  or  22,  as  the  case  might  be. 

Mr.  Day.  Tlie  rate  from  Kansas  City  to  Chicago  was  23^? 

Mr.  Wann.  The  pubhshed  tariff'. 

Mr.  Day.  And  you  carried  dressed  beef  at  what  rate? 

Mr.  Wann.  I  do  not  think  we  hauled  any  beef  to  Chicago  proper. 

Mr.  Day.  Well,  taking  the  Chicago  rate,  I  mean.  How  much  con- 
cession did  you  make  in  that? 

Mr.  Wann.  Five  cents. 

Mr.  Day.  Now,  about  j)acking-house  products  up  to  the  Mississippi 
River.     Did  you  carry  any  uj)  to  the  Mississippi  River? 

Mr.  Wann.  For  the  first  three  months,  yes,  sir;  then,  as  I  stated, 
from  July  to  October  we  virtually  hauled  none. 

Mr.  Day.  After  October  what  rate  did  you  put  in? 

Mr.  Wann.  I  instructed  my  men  5  cents  off. 

Mr.  Day.  That  was  18^  cents  from  Kansas  City  to  Chicago  or  Chicago 
common  points? 

Mr.  Wann.  This  was  through  export  traffic;  90  per  cent  of  the 
Kansas  City  business  is  export,  possibly  05. 

Mr.  Day.  You  carried  some  for  domestic  consumption  at  that  con- 
cession? 

Mr.  Wann.  If  there  was  any,  it  would  not  amount  to  anything — 
would  not  amount  to  5  per  cent. 

Mr.  Day.  Whatever  you  did,  it  went  at  the  samet 

Mr.  Wann.  At  the  same  rate;  yes,  sir. 

Mr.  Day.  How  did  you  adjust  the  differences  to  the  shippers T 

Mr.  Wann.  Through  our  connections. 

Mr.  Day.  How?    State  how  you  did  it. 

Mr.  Wann.  In  export  provisions  we  prepaid  at  the  net  rate. 

Mr.  Day.  Prepaid  at  Kansas  City  through  to  the  seaboard? 

Mr.  Wann.  I  do  not  know  whether  it  was  paid  through  to  seaboard 
or  not. 

Mr.  Day.  It  was  prepaid  beyond  your  line? 

Mr.  Wann.  Prepaid  all  the  way  through,  so  far  as  I  understood. 
It  was  prepaid,  so  lar  as  our  comi)any  was  concerned,  less  the  amount 
we  agreed  to  refund.  • 

Mr.  Day.  Was  tlie  shrinkage  taken  out  in  advance? 

Mr.  Wann.  I  issued  a  relief  to  our  agent.  It  was  18 J  cents;  we 
would  accept  13 J  i)repaid. 

Mr.  Day.  Did  you  settle  any  of  these  by  voucher? 

Mr.  Wann.  No,  sir. 

Mr.  Day.  In  October,  after  you  put  in  this  cut  rate,  made  this  con- 
cession of  5  cents,  was  that  billed  flat? 

Mr.  Wann.  That  is  what  I  am  talking  about  now. 

Mr.  Day.  That  was  billed  at  the  published  tariff  rates? 

Mr.  Wann.  Yes,  sir. 

Mr.  Day.  Now,  what  concession  was  made  on  dressed  meats  after 
October,  during  the  mouths  of  November  and  December? 

Mr.  Wann.  That  was  5  cents. 

Mr.  Day.  How  were  dressed  meats  billed  t 

Mr.  Wann.  At  tariif  rates. 

Mr.  Day.  The  same  thing? 

Mr.  Wann.  Yes,  sir. 

Mr.  Day.  Tbey  prepaid  them? 

Mr.  Wann.  No,  sir;  my  understanding  is  that  that  is  not  prepaid. 
That  is  settled  through  our  connections. 

Mr.  Day.  They  charge  it  back  to  you? 


APPENDIX   G.  361 

Mr.  Wann.  Yes,  sir. 

Mr.  Day.  It  is  settled  in  your  general  accounts  t 

Mr.  Wann.  General  accounts,  on  vouchers  by  me. 

Mr.  Day.  What  is  it  supposed  to  be  for? 

Mr.  Wann.  Traffic  balances. 

Mr.  Day.  Does  it  state  that  it  is  a  shrinkage  of  the  rate? 

Mr.  Wann.  No,  sir. 

Mr.  Day.  Is  there  any  evidence  in  the  voucher  ? 

Mr.  Wann.  No,  sir. 

Mr.  Day.  How  does  it  appear  on  the  books  of  your  company? 

Mr.  Wann.  That  I  do  not  know.  All  I  know  is  that  I  approve  the 
voucher  and  I  sign  it.     I  know  what  it  is. 

Mr.  Day.  So  far  as  the  paying  of  rebates  to  the  shippers  or  con- 
signees of  traffic  is  concerned,  during  the  past  year  you  have  done  noth- 
ing of  that  kind? 

Mr.  Wann.  Not  on  this  particular  business. 

Mr.  Day.  I  am  speaking  of  this  particular  business.  Packing-house 
products  and  dressed  meats  we  are  talking  about. 

Mr.  Wann.  Yes,  sir. 

Mr.  Day.  Did  you  have  any  information  that  traffic  was  underbilled 
on  your  line? 

Mr.  Wann.  No,  sir;  I  have  no  knowledge  of  it. 

Mr.  Day.  Have  you  any  reason  to  believe  that  traffic  is  carried  at 
less  than  actual  weights? 

Mr.  Wann.  No,  sir;  I  have  not. 

Mr.  Day.  Has  your  road,  so  far  as  you  have  information,  partici- 
pated in  any  shrinkage  whereby  a  reduction  of  the  rate  has  been 
accomplished? 

Mr.  Wann.  No,  except  where  the  rate  from  the  Mississippi  River  to 
New  York  is  lower  than  the  division  of  the  through  rate,  which  would 
force  us  to  participate  from  the  Mississippi  Eiver  to  New  York,  as  Mr. 
Johnson  explained. 

Mr.  Day.  And  in  these  instances  you  settled 

Mr.  Wann.  By  line  voucliers. 

Mr.  Day.  The  line  agents  would  draw  on  yoii  for  your  share  of  that — 
their  auditing  department  would  draw  on  you  for  your  share  of  the 
rebate? 

Mr.  Wann.  No. 

Mr.  Day.  How  would  they  do  it? 

Mr.  Wann.  Those  balances  come  to  me,  and  when  checked  by  the 
auditor  1  issue  a  check  to  the  agent  of  the  line. 

Mr.  Day.  Tlie  line  agent  distributes  it  to  the  persons  entitled  t»  it? 

Mr.  Wann.  I  do  not  know. 

Mr,  Day.  Who  do  you  send  the  check  to? 

Mr.  Wann.  The  check  is  made  in  favor  of  the  line— the  Red  Line, 
the  Blue  Line,  the  Traders'  Despatch,  taking  into  account  our  share 

Mr.  Day.  And  the  rebates? 

Mr.  Wann.  Yes,  sir. 

Mr.  Day.  And  they  divide  it  and  make  application  of  the  payment? 
You  simply  recognize  and  approve  of  the  allowance  by  your  company 
of  its  share  of  that? 

Mr.  Wann.  Yes,  sir;  our  proportion. 

Mr.  Day.  After  you  found  in  October  what  you  regarded  as  neces- 
sity to  cut  the  rate,  did  you  make  any  contract  for  any  specific  time 
with  any  packing  house  or  any  traffic  man  representing  any  packing 
house  or  any  shipper? 


362  APPENDIX   O. 

Mr.  Wann.  No,  sir. 

Mr,  Day.  You  have  made  no  contract  or  understanding? 

Mr.  Wann.  Only  this:  We  never  make  an  arrangement  except  we 
can  take  it  out  in  thirty  days,  and  often  in  ten.  This  particular  con- 
tract would  be  subject  to  thirty  days. 

iMr.  Day.  What  was  said  when  you  put  this  in?  How  did  you  inform 
the  shipper  that  he  might  rely  on  this  rate  for  thirty  days? 

JMr.  Wann.  I  would  say  to  a  connection,  you  can  charge  us  that 
amount  subject  to  thirty  days'  notice  of  change. 

Mr.  Day.  How  did  you  advise  the  people  on  the  Missouri  and  the 
Mississippi  rivers  that  you  would  make  that  cut? 

Mr,  Wann.  I  do  not  think  it  necessary  to  advise  them,  because  most 
of  them  are  represented  in  Chicago. 

Mr.  Day.  But  it  was  necessary  for  them  to  know  that  it  would  stay 
in  thirty  days,  was  it  not? 

Mr.  Wann.  I  do  not  think  so. 

Mr.  Day.  How  did  you  make  this  special  arrangement;  what  form 
did  this  special  arrangement  take? 

Mr.  Wann.  I  sny  AAhen  we  were  convinced  that  other  roads  were 
making  this,  I  told  our  connections  and  shij)pers  when  they  came  into 
my  office 

Mr.  Day.  Told  them  what? 

Mr.  Wann.  I  told  them  we  would  meet  the  situation,  and  in  the  mean- 
time if  they  found  out,  to  let  me  know. 

Mr.  Day.  That  they  could  go  ahead  and  ship? 

Mr.  Wann.  And  I  would  protect  them. 

Mr.  Day.  Did  you  give  them  to  understand  that  they  could  rely  on 
this  for  thirty  days? 

Mr.  Wann.  I  do  not  know  whether  I  said  that  specifically. 

Mr.  Day.  It  was  understood  that  they  could? 

Mr.  Wann.  No,  sir. 

Mr.  Day.  Have  you  such  an  arrangement  as  that  in  nowt 

Mr.  Wann.  Virtually;  yes,  sir. 

Mr.  Day.  It  is  in  now? 

Mr.  Wann.  Virtually;  yes,  sir. 

Mr.  Day.  Are  you  carrying  either  of  these  commodities  at  a  lower 
rate  than  the  published  rate  now? 

Mr.  Wann.  That  I  do  not  know  yet.  I  will  not  know  until  I  know 
what  the  other  roads  are  doing.  All  I  know  is  what  rumor  says.  I 
believe  there  is  one  now. 

Mr.  Day.  You  believe  there  is  a  contract  other  than  yours! 

Mr.  Wann.  I  do  not  know. 

Mr.  Day.  You  say  it  is  the  rumor? 

Mr.  Wann.  Yes,  sir;  that  is  the  rumor. 

Mr.  Day.  Do  you  make  any  concessions  on  cattle f 

Mr.  Wann.  If  we  were  asked — I  do  not  know  that  we  would  charge 
more  on  cattle  than  on  fresh  beef. 

Mr.  Day.  During  last  year  did  you  carry  cattle  at  a  lower  rate  than 
the  published  rate? 

Mr.  Wann.  I  think  we  did. 

Mr.  Day.  For  whom  ? 

Mr.  Wann.  I  do  not  know.    I  would  have  to  look  that  up. 

Mr.  Day.  At  what  rate? 

Mr.  Wann.  Some  at  $5  and  some  possibly  at  $10  a  car  oft'  at  Chicago. 

Mr.  Day.  It  did  not  go  by  the  hundred  pounds? 

Mr.  Wann.  No,  sir;  cattle  take  the  same  rate  as  beef. 


APPENDIX   G.  363 

Mr.  Day.  There  is  a  great  difference  between  $5  a  car  and  5  cents  a 
liuudred  poiiuds  off. 

Mr.  Wann.  Yes,  sir.  The  division  of  the  through  rate  would  be  19 
or  20  cents.     It  would  be  at  that  case  $3. 

Mr.  Day.  When  did  you  hear  this  rumor  that  there  was  a  contract 
for  1902  ? 

Mr.  Wann.  Last  time,  just  now. 

Mr.  Day.  Well,  prior  to  this  inquiry? 

Mr.  Wann.  I  do  not  know  that  I  could  say. 

Mr.  Day.  What  packing  house  did  this  rumor  attribute  the  contract 
to  be  with? 

Mr.  Wann.  I  do  not  know. 

Mr.  Day.  What  ones?  You  know  what  concerns  the  rumor  at- 
tached to? 

Mr.  Wann.  I  do  not  like  to  testify  as  to  rumor. 

Mr.  Day.  I  am  asking  you  as  to  the  rumor.  You  say  you  are  pre- 
pared to  meet  that  situation. 

Mr.  Wann.  Well,  I  think  the  testimony  that  will  be  given  will  satisfy 
you  about  the  situation  on  this  particular  commodity. 

Mr.  Day.  Where  is  it  rumored  that  this  contract  applies  between? 

Mr.  Wann.  Well,  I  presume  between  the  Missouri  liiver  and  New 
York.  I  presume  between  the  Missouri  River  and  New  York  or  the 
East. 

Mr.  Day.  How  much  concession  does  rumor  attribute  to  this  contract? 

Mr.  Wann.  That  I  do  not  know.  That  has  never  been  mentioned  in 
my  presence. 

Mr.  Day.  Now,  where  you  made  these  authorizations  to  your  agent 
at  Kansas  City  to  accept  13i  cents  on  provisions,  in  whose  behalf  was 
that?     Who  was  the  shipper? 

Mr.  Wann.  Well,  we  liave  hauled  the  provisions  of  the  Cudahy  peo- 
ple, the  S.  &  S.  Company,  Swift  &  Co.,  and  the  Omaha  Packiug  Com- 
pany.    We  treat  tliem  all  alike. 

Mr.  Day.  Does  your  line  extend  up  to  Omaha? 

Mr.  Wann.  No,  sir. 

Mr.  Day.  Has  the  Omaha  establishment  a  place  at  Kansas  City? 

Mr.  Wann.  They  had.    I  think  they  stopped  the  1st  of  January. 

Mr.  Day.  January  of  this  year? 

Mr.  Wann.  Yes,  sir. 

Mr.  Day.  You  say  you  have  made  no  settlements  by  voucher  with 
these  shippers? 

Mr.  Wann.  No,  sir. 

Mr.  Day.  Nor  check? 

Mr.  Wann.  No,  sir. 

Mr.  Day.  Nor  cash! 

Mr.  Wann.  No,  sir. 

Mr.  Day.  That  is  all,  j'^our  honors. 

Commissioner  Clements.  Can  you  make  up  a  statement  and  show 
each  shipment  during  the  last  year  and  who  it  was  made  by  and  the 
rate  paid  ? 

Mr.  Wann.  You  mean  this  particular  traffic? 

Commissioner  Clements.  These  products  that  are  the  subject  of 
this  inquiry. 

Mr.  Wann.  That  can  be  done,  Mr.  Commissioner.  The  auditing 
department  has  charge  of  that. 

Commissioner  Clements.  And  show  the  amount  of  rebates  paid  to 
each  person? 


364  APPENDIX   Q. 

Mr.  Wann.  I  presume  that  could  be  done.  It  would  be  quite  a  job, 
because  there  might  be  a  number  of  other  items  for  traffic  balances.  I 
presume  it  could  be  done,  but  it  would  take  a  lot  of  time. 

Commissioner  Clements.  It  is  an  important  matter,  and  we  would 
be  glad  to  have  that  statement  of  each  shi])ment,  the  amount  of  the 
rate  collected,  the  amount  of  the  rebates  paid,  and  the  date  of  each. 

Mr.  Wann.  I  will  have  that  made  up  by  the  auditing  department. 

Commissioner  Clements.  Do  you  know  how  much  was  paid  during 
the  year? 

Mr.  Wann.  I  should  think  not  to  exceed  $2,500  or  $2,000  a  month. 

Commissioner  Clements.  To  all  shippers? 

Mr.  Wann.  Yes,  sir. 

Commissioner  Clements.  Have  you  named  the  persons  with  whom 
you  deal  in  regard  to  these  rebates  respecting  each  of  these  houses? 

Mr.  Wann.  Yes,  sir. 

Commissioner  Clements.  You  have  already  given  the  names? 

Mr.  Wann.  Yes,  sir. 

Commissioner  Clements.  I  infer  from  your  testimony  that  when 
this  rate  got  down  to  13J  cents  it  was  pretty  well  maintained  by  all  the 
lines? 

Mr.  Wann.  Yes,  sir;  it  was  by  us. 

The  Chairman.  What  is  your  information  and  belief  as  to  whether 
it  was  maintained  by  other  lines? 

Mr.  Wann.  I  think  it  has  been  maintained. 

The  Chairman.  I  will  ask  what  has  been  asked  a  previous  witness. 
Can  you  exj^lain  why  it  is  easier  to  observe  a  13^-ceiit  rate  than  an 
18^-cent  rate? 

Mr.  Wann.  It  is  as  easy  to  maintain  an  18^-cent  rate  as  a  13^-cent 
rate. 

The  Chairman.  Why  has  it  not  been  done? 

Mr.  Wann.  You  might  ask  me  if  I  was  the  leader. 

The  Chairman.  I  know  you  are  not. 

Mr.  Wann.  Simply  competition  forces  it,  I  am  sorry  to  say. 

The  Chairman.  You  do  not  approve  of  this  state  of  affairs,  Mr. 
Wann? 

Mr.  Wann.  No,  sir;  I  do  not. 

The  Chairman.  How  do  you  think  it  can  be  corrected? 

Mr.  Wann.  That  is  a  great  big  problem.  I  have  tried  to  study  it 
for  a  number  of  years. 

The  Chairman.  You  have  no  remedy  to  suggest  for  this  state  of 
things? 

Mr.  Wann.  ISTo,  sir. 

Commissioner  Fifer.  How  did  the  rates  in  the  days  of  pools  com- 
pare with  the  rates  at  the  present  time?     Were  tliey  more  or  less? 

Mr.  Wann.  Well,  the  rates  all  the  time  have  been  declining  for  the 
last  thirty  years. 

Commissioner  Prouty.  How  much  did  this  rate  decline  in  the  last 
twenty  years? 

Mr.  Wann.  I  was  talking  of  rates  in  general.  I  do  not  know  as  to 
rates  on  dressed  beef.  I  have  only  had  direct  charge  of  it  for  five 
years.     But  it  is  too  low  to  day. 

The  Chairman.  Is  the  published  tariff  lower  than  it  was  five  years 
ago? 

Mr.  Wann.  No,  sir.    The  published  rate  is  too  low,  in  my  judgment? 

Commissioner  Prouty.  Is  it  lower  than  it  was  ten  years  ago? 

Mr.  Wann.  I  do  not  think  so.    I  may  be  wrong. 


APPENDIX   Q.  365 

Commissioner  Prouty.  This  competition  has  not  produced  any 
efifect  on  the  published  taiitil 

Mr.  Wann.  Ko,  sir 

(Joramissiouer  Prouty.  Whatever  effect  it  has  produced  has  been 
on  the  secret  tariti? 

Mr.  Wann.  Yes,  sir. 

Commissioner  Prouty.  Do  you  think  the  secret  tariff  would  be 
better  maintained  if  you  had  a  pool,  than  it  is  now? 

Mr.  Wann.  If  there  was  a  pool,  I  do  not  think  there  would  be  any 
secret  rate.    Past  experience  makes  me  say  that. 

Commissioner  Prouty.  If  Mr.  Johnson's  idea  is  right,  the  public 
would  ])ay  just  so  much  more  for  this  service  than  they  do  now? 

Mr.  Wann.  I  do  not  think  they  would. 

Commissioner  Prouty.  Who  do  you  think  gets  the  benefit  of  the 
cut  rate^ 

Mr.  Wann.  It  is  a  hard  question.  When  rates  are  very  low  they 
have  got  to  give  it  up.  They  can  not  keep  it.  The  competition  among 
themselves  is  so  great.  I  never  found  my  butcher  reducing  my  bill  on 
account  of  it. 

Commissioner  Fifer.  If  pooling  was  legalized  at  the  present  time,  do 
you  think  it  would  reduce  the  rate  between  Kansas  City  and  Chicago? 

Mr.  Wann.  No,  sir. 

Commissioner  Fifer.  You  think  there  would  be  no  disposition  on 
the  part  of  the  railroads  to  get  together  and  push  up  the  rates? 

Mr.  Wann.  No,  sir. 

Commissioner  Prouty.    Why  not,  if  they  are  too  low? 

Mr.  Wann.  I  was  thinking  of  the  whole  situation. 

Commissioner  Prouty.  You  think  it  would  raise  the  rate  on  dressed 
beef? 

Mr.  Wann.  I  think  it  should  be  raised  for  the  service  given. 

Commissioner  Prouty.  Do  not  you  think  the  rates  generally  are  too 
low? 

Mr.  Wann.  Yes,  sir;  on  the  heavy  commodities  moved. 

Commissioner  Prouty.  The  effect  of  a  pooling  provision  would  be 
to  raise  the  rates,  would  it  not? 

Mr.  Wann.  No,  sir;  if  the  rates  were  maintained. 

Commissioner  Prouty.  If  they  were  satisfied  they  could  maintain 
the  rates? 

Mr.  Wann.  Yes,  sir. 

Commissioner  Prouty.  That  is  all. 

The  Chairman.  If  there  are  no  further  questions  to  be  asked  Mr. 
Wann,  he  will  be  excused. 

The  witness  was  excused. 

Mr.  Day.  I  will  call  Mr.  A.  C.  Bird. 

A.  C.  Bird,  being  duly  sworn,  testified  as  follows: 

T\Ir.  Day.  Mr.  Bird,  you  are  the  traific  manager  of  the  Chicago,  Mil- 
waukee and  St.  Paul? 

Mr.  Bird.  I  am  third  vice-president. 

Mr.  Day.  What  is  the  general  scope  of  your  jurisdiction? 

Mr.  Bird.  I  have  charge  of  all  traffic. 

Mr.  Day.  Mr.  Bird,  please  state  to  the  Commission  what  concessions 
from  the  published  tariffs  were  made  on  your  line  during  the  year  1901 
in  respect  to  the  transportation  of  packinghouse  products  and  dressed 
meats,  taking  packing-house  products  first. 


366  APPENDIX  a. 

Mr.  Bird.  The  tariff  rate  IVom  the  Missouri  lliver  to  Chicago  is  234 
cents,  and  from  the  Mississii)i)i  Itiver  crossiiijjs  18.V  cents.  During  the 
early  part  of  the  year,  as  near  as  I  recall  it,  the  tariff  rate  was  enforced. 
In  the  spring-,  or  a  little  later,  my  impression  is,  a  concession  of  3  cents 
was  made;  and  in  July,  perhaps  about  the  middle  of  July,  the  conces- 
sion was  5  cents,  and  that  is  true  of  fresh  meats. 

Mr.  Day.  And  that  5-cent  concession  continued  throughout  the  year! 

Mr.  Bird.  Yes,  sir. 

Mr.  Day.  Was  the  concession  greater  than  that  during  any  period  of 
the  last  eight  mouths  of  the  year? 

Mr.  Bird.  1  think  not. 

Mr.  Day.  Was  that  concession  made  on  these  two  commodities — the 
commodities  known  as  packing-house  products  and  dressed  meats  with- 
out reference  to  the  destination  of  the  traffic?  I  mean  domestic  and 
export. 

Mr.  Bird.  Yes,  sir. 

Mr.  Day.  How  was  it  billed?  This  traffic  that  your  road  carried  at 
a  concession  from  the  established  rates,  how  was  it  billed? 

Mr.  Bird.  With  the  possible  exception  of  export  for  a  period,  it  was 
generally  billed  at  the  tariff'  rate. 

Mr.  Day.  What  period  was  that  exception? 

Mr.  Bird.  I  am  not  clear  as  to  that.  Certain  export  business  was 
billed  prepaid  at  the  net  rate  to  the  Mississippi  Eiver  and  there 
rebilled  through  to  the  Atlantic  destination. 

Mr.  Day.  AVhen  settlements  were  made,  what  form  did  they  take, 
settlements  with  the  shippers?  They  billed  it  at  one  rate  and  carried 
it  at  another? 

Mr.  Bird.  I  can  not  answer  that  in  detail,  but  in  general  1  can  tell 
you.  A  statement  was  made  by  the  shipper,  or  agent  of  the  shipper, 
shewing  the  date  of  shipment  and  the  weight,  and  handed  in.  It  was 
understood  how  much  concession  was  made,  and  it  was  made. 

iMr.  Day.  How  was  it  done — in  the  form  of  a  voucher  or  check? 

Mr.  Bird.  Voucher. 

Commissioner  Prouty.  Was  that  voucher  signed  by  the  shipper  when 
he  got  his  money? 

Mr.  Bird.  Well,  doubtless.  I  do  not  think  I  ever  saw  one  signed  by 
the  shipper,  but  there  was  a  receipt  given  in  some  form. 

Commissioner  Prouty.  Is  that  receipt  preserved  by  your  company? 

Mv.  Bird.  I  can  not  say  definitely. 

Commissioner  Prouty.  Into  whose  office,  or  through  whose  office, 
would  that  receipt  pass? 

Mr.  Bird.  When  I  approved  the  voucher,  it  was  the  last  I  saw  of  it, 
I  do  not  know. 

Commissioner  Prouty.  Do  you  think  it  was  discreet  to  let  somebody 
else  deal  with  it  afterwards? 

Mr.  Bird.  I  could  not  do  it  all  myself. 

Commissioner  Prouty.  You  approved  the  voucher? 

]Mr.  Bird.  Yes,  sir. 

Commissioner  Prouty.  You  do  not  know  how  it  is  paid? 

Mr.  Bird.  I  could  not  answer  definitely  in  that  respect. 

Mr.  Day.  To  whom  did  you  transmit  the  claim  after  you  approved 
it?    What  office  did  it  go  to? 

Mr.  Bird.  The  general  freight  agent  or  some  one  designated  by  him 
generally. 

Mr.  Day.  Well,  when  it  went  to  voucher  and  the  check  or  draft  was 
issued,  who  issued  the  draft  or  check? 


APPENDIX  a.  367 

Mr,  Bird.  I  do  not  kuow.  I  did  not  touch  that  part  of  it.  Some 
cue  paid  it. 

Mr.  Day.  You  approved  these  claims  in  the  first  instance? 

Mr.  Bird.  Yes,  sir. 

Mr.  Day.  In  whose  behalf  were  these  claims  approved,  what  con- 
cerns? 

M  \  Bird.  My  recollection  is  that  it  was  with  the  individual  with 
whoM  the  arrangement  was  made,  but  I  can  not  be  positive.  There 
were  a  good  many  transactions  and  I  really  do  not  know. 

Mr.  Day.  Your  recollection  is  that  the  claims  were  in  favor  of  the 
agent  who  took  charge  of  the  business? 

Mr.  Bird.  Yes,  sir. 

Mr.  Day.  Now,  what  concerns,  what  firms,  what  packing  houses, 
say,  during  the  past  six  months,  were  tliese  claims  made  in  favor  of? 

Mr.  Bird.  I  think  the  St.  Paul  company  handled  claims  that  way 
for  every  packer  on  the  Missouri  River. 

Mr.  Day.  Were  these  concessions  uniform  ?  Is  it  your  understanding 
that  all  the  lines  between  Kansas  City  and  Chicago  made  identically 
the  same  concession  from  the  published  rate? 

Mr.  Bird.  Well,  not  precisely  that.  Perhaps  there  might  be  a 
variation  of  dates — not  very  much.  As  a  rule,  my  impression  is  that 
all  the  shippers  had  the  same  rates. 

Mr.  Day.  What  was  the  occasion  of  these  concessions?  They  were 
made  under  your  direction  or  authorization? 

Mr.  Bird.  Under  my  authorization. 

Mr.  Day.  What  reasons  moved  you  to  depart  from  your  published 
rate? 

Mr.  Bird.  Competition,  pure  and  simple. 

Mr.  Day.  You  mean  by  that  somebody  else  had  made  a  concession 
or  that  you  believed  they  had? 

Mr.  Bird.  I  believed  they  had. 

Mr.  Day.  Lines  between  Kansas  City  and  Chicago  or  between  Chi- 
cago and  St.  Louis? 

Mr.  Bird.  So  far  as  the  general  business  is  concerned,  between  our 
direct  competitors. 

Mi-.  Day.  Did  you  make  any  greater  concession  on  traffic  destined 
for  points  east  of  Chicago  than  on  traffic  that  had  Chicago  for  its 
objective? 

Mr.  Bird.  I  can  not  answer  that  definitely,  but  I  think  there  was  a 
time  that  we  carried  on  export  provisions  a  little  lower  rate. 

Mr.  Day.  What  was  the  lowest  rate  you  know  of  that  traffic  was 
carried  on  from  the  Missouri  River  to  the  Atlantic  seaboard,  or  from 
the  Mississippi  River  to  the  seaboard? 

Mr.  Bird.  I  can  not  answer  that.  We  have  made  our  rates  to  the 
Missi8sip])i  River  or  to  Chicago.  We  made  the  rate  to  the  Mississippi 
River  an  arbitrary  rate,  and  from  the  Mississippi  River  to  the  seaboard 
destination  we  joined  our  eastern  connection  in  whatever  rate  was 
made. 

Mr.  Day.  Wliat  was  the  lowest  rate  you  made  from  any  Missouri 
River  point  to  the  Mississippi  River? 

Mr.  Bird.  I  think  the  lowest  made  during  the  year  was  13^  cents. 
That  is  my  recollection. 

Mr.  Day.  And  the  lowest  to  Chicago? 

Mr.  Bird.  Eighteen  and  a  half  cents. 

Mr.  Day.  And  the  lowest  from  the  Mississippi  River  to  New  York  or 
Boston? 


368  APPENDIX  a. 

Mr.  Bird.  I  do  not  know. 

Mr.  Day,  The  lowest  you  can  recall? 

Mr.  Bird.  About  20  or  30  cents  on  packing-liouse  products,  and 
possibly  35  on  dressed  meats,  or  45.     I  do  not  remember;  45,  I  think. 

Mr.  Day.  Mr.  Bird,  has  your  road  a  contract  or  arrangement  with 
any  concern  now  representing  a  concession  in  rates  on  packing-house 
products  or  dressed  meats? 

Mr.  Bird.  I  think  we  have  an  understanding  that  we  intend  to  meet 
the  rates  made  by  any  standard  line. 

Mr.  Day.  What  do  you  mean  by  a  "standard  line?" 

Mr.  Bird.  A  line  that  can  make  a  fast  run  on  dressed  beef. 

Mr.  Day.  What  are  those  lines? 

Mr.  Bird.  Such  lines  as  the  Northwestern,  the  Burlington,  the 
Alton,  and  the  Eock  Island. 

Commissioner  Prouty.  What  evidence  are  you  going  to  require  to 
convince  you  that  a  standard  line  has  made  another  rate  than  the  i)ub- 
lished  rate? 

Mr.  Bird.  The  only  evidence  we  ever  have— either  the  statement  of 
the  shipper  or  possibly  the  admission  of  the  other  carrier,  or  both. 

Commissioner  Fifer.  Can  you  not  sometimes  tell  by  the  shifting  of 
the  freight? 

Mr.  Bird.  We  guess  it  from  that.  We  surmise  that  there  is  either 
a  change  in  the  rate  or  a  purpose  to  make  us  believe  the  rate  has  been 
changed.  . 

Commissioner  Prouty.  I  understand  that  you  are  carrying  this 
freight,  and  you  say  to  your  shippers  if  any  line  makes  a  lower  rate  we 
will  meet  it? 

Mr.  Bird.  We  expect  to  meet  it. 

Commissioner  Prouty.  How  are  you  going  to  know  ? 

Mr.  Bird.  Those  are  the  only  means  we  have  of  knowing. 

Commissioner  Clements.  Suppose  one  of  these  houses  sends  a  state- 
ment for  a  shipment  made  yesterday  or  the  day  before,  what  are  you 
going  to  do  about  it? 

Mr.  Bird.  I  do  not  know. 
'  Commissioner  Prouty.  About  how  low  a  rate  do  you  understand  the 
other  fellow  is  likely  to  make? 

Mr.  Bird.  I  do  not  think  there  is  any  inclination  to  go  below  18^ 
cents  to  Chicago.  I  think  most  lines  are  willing  to  go  out  of  the  busi- 
ness at  anything  less  than  that. 

Commissioner  Prouty.  If  your  shipper  came  around  and  said  that 
the  rate  was  ISi  cents,  would  you  be  inclined  to  accept  that  statement 
and  give  him  the  benefit  of  it? 

Mr.  Bird.  Very  much  inclined. 

Commissioner  Clements.  Don't  you  think  the  shippers  unduly  work 
the  railroads  that  way,  if  their  statement  is  accepted  as  satisfactory 
proof  of  the  cutting  of  the  rate  by  some  competitor? 

Mr.  Bird.  Well,  I  ought  to  suspect  a  good  many  such  things  as  that. 

Commissioner  Clements.  It  makes  a  very  unsatisfactory  condition 
of  rates,  does  it  not,  to  have  to  depend  on  the  statements  of  shixjpers 
that  want  a  lower  rate? 

Mr.  Bird.  Exceptionally  so. 

Commissioner  Prouty.  Who  do  you  think  gets  the  benefit  of  the 
cutting  of  the  rate? 

Mr.  Bird.  I  am  not  so  sure  of  that  as  I  am  who  makes  the  loss.  I 
think  under  some  circumstances  the  public  get  it.  I  think  there  is 
just  as  much  competition  sometimes  between  the  packers  as  there  is 


APPENDIX   Q.  369 

between  the  railroads,  and  they  are  laboring  under  the  same  disad- 
vantages as  the  carriers,  and  therefore  they  lose  the  imaginary  profit. 
If  a  single  shipper  had  a  concession  that  others  had  not  he  would  get 
the  benefit  probably. 

Commissioner  Pkouty.  Your  impression  is  that  all  of  them  get  the 
same  rate? 

Mr.  Bird.  I  am  quite  certain  of  that. 

Commissioner  Prouty.  And  that  the  railroads  carry  at  about  the 
same  rate  ? 

Mr.  Bird.  My  belief  is  that  18^  cents  is  considered  as  low  as  any- 
body wants  to  go. 

Commissioner  Prouty.  If  a  low  rate  is  a  good  thing  for  the  public, 
why  is  not  this  thing  all  right  now?  The  public  are  getting  about  5 
cents  better  than  they  would  if  you  maintained  the  published  rate? 

Mr.  Bird.  I  do  not  think  I  quite  comprehend  your  question. 

Commissioner  Prouty.  You  say  that  is  a  bad  state  of  affairs;  that 
you  do  not  like  it.  If  the  i)ublic  get  the  benefit  of  this  rate  tlie  public 
are  getting  the  benefit  of  a  5  cent  better  rate  than  they  would  if  you 
maintained  the  published  tariff.  You  say  that  everybody  has  the  same 
rate.    If  that  is  so,  why  is  not  this  present  condition  of  things  all  right? 

Mr.  Bird.  I  think  the  rate  is  too  low. 

Commissioner  Prouty.  That  is  the  only  fault  you  have  to  find  with 
it,  that  the  rate  is  too  low? 

Mr.  Bird.  I  think  it  is,  decidedly. 

Commissioner  Prouty.  What  is  your  remedy  for  this  situation? 
How  are  you  going  to  stop  these  departures  from  the  published  rate? 

Mr.  Bird.  1  have  never  been  able  to  find  one.  I  do  not  think  there 
is  any  hope  of  a  better  condition  until  the  carriers  are  permitted  to 
make  contracts  with  each  other. 

Commissioner  Prouty.  You  tliink  that  would  remedy  it? 

Mr.  Bird.  Under  jjroper  arrangements;  yes,  sir. 

Commissioner  Prouty.  You  seem  to  have  gotten  into  a  hopeless 
situation.  Last  year  you  maintained  the  rate  at  the  beginning;  then 
you  got  to  a  concession  of  3  cents.  This  year  you  are  willing  to  start 
out  with  5. 

Mr.  Bird.  Not  start  out.  It  is  more  like  a  continuation.  The  fore 
part  of  1901  the  rates  were  satisfactorily  maintained. 

Commissioner  Prouty.  In  other  words,  you  have  got  around  now  to 
the  point  where  there  is  no  new  leaf  to  turn  over.  You  have  turned 
them  all  over. 

Mr.  Bird.  I  am  afraid  so. 

Commissioner  Clements.  Don't  you  think  that  some  of  the  smaller 
shippers  get  the  worst  of  it  in  these  departures,  and  do  not  get  an  equal 
cut  with  the  larger  ones? 

Mr.  Bird.  I  do  not  know  of  any  such  case. 

Commissioner  Clements.  You  are  speaking  now  of  those  on  the 
Missouri  River  and  at  Chicago? 

Mr.  Bird.  At  the  Missouri  River. 

Commissioner  Clements.  You  do  not  know  anything  about  how  it 
affects  any  of  these  smaller  ones  east  of  Chicago? 

Mr.  Bird.  I  do  not  know  how  the  business  is  conducted  here  except 
from  information  I  got  to  day. 

Commissioner  Clements.  You  think  the  small  ones  fare  as  well  as 
the  large  ones  along  the  Missouri  River — that  they  get  as  low  a  rate  and 
get  it  as  quickly? 

Mr.  Bird.  There  seems  to  be  something  in  the  air  that  they  all  know 
it  and  get  there  pretty  quickly. 
741a— 05 24 


370  APPENDIX   O. 

Commissioner  Clements.  Can  you  furnish  us  a  statement  of  all  ship- 
ments during  the  last  year,  1901,  showing  the  amount  of  each  sliipment 
over  your  road,  the  names  of  the  shippers,  the  amount  of  freight  col- 
lected, the  amount  i)aid  back,  and  to  whom  paid? 

Mr.  Bird.  That  involves  a  laborious  statement,  but  we  can  furnish  it 
if  you  wish.  All  our  statements  of  this  character  are  for  the  calendar 
year— from  whom  shipped,  to  whom  consigned? 

Commissioner  Clements.  And  the  amount  of  each  rebate  allowed 
and  the  date  when  paid? 

Mr.  Bird.  1  think  so.    I  am  not  positive. 

Commissioner  Fifer.  If  pooling  was  legalized  would  it  raise  the 
rates  materially  from  Kansas  City  to  Chicago? 

Mr.  Bird.  That  would  depend  on  the  conditions  under  which  it  was 
legalized,  the  restrictions  placed  on  pooling.  Are  you  speaking  of  this 
particul  ar  traffi  c  ? 

Commissioner  Fifer.  Yes,  sir. 

Mr.  Bird.  I  think  if  the  pool  was  legalized  the  rate  would  be  23^ 
cents  net. 

Commissioner  Fifer.  That  is  the  published  rate  now? 

Mr.  Bird.  Yes,  sir. 

Commissioner  Fifer.  You  say  that  rate  is  too  low? 

Mr.  Bird.  I  doubt  if  it  would  be  good  policy  to  advance  a  rate  under 
such  circumstances. 

Commissioner  Fifer.  Is  there  a  fair  profit  at  23^  cents? 

Mr.  Bird.  I  do  not  think  that  traffic  pays  its  share  of  transportation 
charges  at  23^  cents. 

Commissioner  Clements.  As  an  active,  intelligent  traffic  manager  of 
a  railroad,  I  suppose  you  are  always  looking  out  for  leaks  in  your  rail- 
road as  far  as  you  can.  Can  you  tell  us  the  amount  you  paid  last  year 
in  rebates? 

Mr.  Bird.  It  would  only  be  a  guess. 

Commissioner  Clements.  Would  it  not  be  something  more  than  a 
guess? 

Mr.  Bird.  There  have  been  parts  of  the  year  that  we  were  not  doing 
much  business. 

Commissioner  Clements.  Well,  I  guess  that  statement  will  cover 
that. 

Mr.  Day.  Mr.  Bird,  is  the  contract  in  writing  1 

Mr.  Bird.  Is^o  sir. 

Mr.  Day.  Is  it  for  a  definite  time? 

Mr.  Bird.  I  think  not.    I  do  not  think  it  is. 

Mr.  Day.  Does  it  fix  the  rate? 

Mr.  Bird.  The  general  proposition  is  that  we  are  supposed  to  meet 
our  competitors,  but  not  lower  than  so  much. 

Mr.  Day.  How  long  has  it  been  in  operation? 

Mr.  Bird.  We  have  been  carrying  probably  this  same  rate  since 
sometime  in  October,  perliaps  farther  back  than  that. 

Mr.  Day.  Is  it  with  more  than  one  concern? 

Mr.  Bird.  The  same  rate  to  all. 

Mr.  Day.  1  am  speaking  of  this  contract. 

Mr.  Bird.  We  have  no  specific  contract— provided  the  rate  does  not 
go  belo  w  somuch.  There  have  been  conversations  with  various  people 
on  the  subject,  but  I  can  not  attempt  to  give  you  more  than  a  general 
answer  on  these  questions. 

Mr.  Day.  That  is  all  I  wish  to  ask  Mr.  Bird. 

The  Chairman.  That  seems  to  be  all,  Mr.  Bird. 

Mr.  Day.  Mr.  Paul  Morton. 


APPENDIX   G.  371 

Paul  Morton,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  -Mr.  Morton,  will  you  state  your  official  relation  to  the 
Atchison  road,  what  your  jurisdiction  is? 

Mr.  Morton.  I  have  general  charge  of  the  commercial  relations  of 
the  company. 

Mr.  Day.  And  charge  of  its  traffic  department? 

Mr.  Morton.  Yes,  sir. 

Mr.  Day.  Mr.  Morton,  the  Commission  wants  to  know  the  conces- 
sions that  have  been  made  during  the  past  year;  take  the  year  1901, 
or  the  last  part  of  it,  or  eight  months  of  the  year;  what  concessions 
have  been  made  from  the  established  tariffs  in  the  transportation  of 
packinghouse  products  and  dressed  beef  or  dressed  meats  by  your 
road? 

Mr.  Morton.  We  have  carried  the  business  from  Kansas  City  to 
Chicago  for  5  cents  less  than  the  published  tariff  to  Chicago  and 
Chicago  junction  points. 

Mr.  Day.  Domestic  as  well  as  export? 

Mr.  Morton.  Both. 

Mr.  Day.  How  long  have  you  been  doing  thatT 

Mr.  Morton.  We  did  it,  1  think,  about  April  1 ;  we  commenced  to  do 
it  from  the  beginning  of  the  year,  at  which  time  there  was  a  general 
declaration  of  good  faith  and  intention  of  an  absolute  maintenance  of 
rates.  We  maintained  the  rate  until  about  April  1.  We  carried,  I  think, 
about  2  per  cent  of  the  business  from  Kansas  City  to  Chicago.  We 
bring  into  Kansas  City  about  33 J  j)er  cent  of  all  the  live  stock  brought 
in  there. 

Commissioner  Fifer.  What  per  cent? 

Mr.  Morton.  About  33^,  and  we  were  not  satisfied  with  the  propor- 
tion of  the  product  that  we  were  getting  out.  1  do  not  know  that  rates 
were  being  cut  via  Chicago  or  via  St.  Louis,  but  we  do  know  that  we 
were  confronted  with  a  condition,  not  a  theory,  and  we  could  not  get 
any  business  unless  we  met  the  conditions,  which  we  did.  We  told  one 
of  the  largest  shi[)pers  in  Kansas  City  that  if  they  would  come  and  ship 
with  us  we  would  give  them  5  cents  reduction  from  the  tariff",  and  in 
order  to  get  them  we  had  to  promise  to  do  it  for  a  year — I  think  until 
the  ist  of  July  of  this  year,  11)02.  Ordinarily,  on  tariff  rates  we  ought 
to  carry  20  to  25  per  cent  of  the  business  from  Kansas  City,  where  the 
rates  are  equal  by  all  lines.  Our  Justification  for  taking  this  business 
was  that  Ave  were  carrying  less  than  10  per  cent  of  what  we  thought 
we  were  fairly  entitled  to. 

Mr.  Day.  What  per  cent  of  the  packing-house  products  from  Kansas 
City  to  Chicago  do  you  think  your  road  ought  to  have? 

Mr.  Morton.  We  think  we  ought  to  have  one-fifth  of  it.  We  prob- 
ably would  not  get  that  under  an  arbitration,  but  that  would  be  what 
we  would  contend  in  case  we  went  before  an  arbitration  committee  for 
a  fair  share  of  the  business. 

Mr.  Day.  Have  you  carried  traffic — these  commodities — at  a  lower 
rate  than  18 J  cents? 

Mr.  Morton.  No;  we  have  not,  unless  there  may  have  been  one  or 
two  occasions  that  I  do  not  know  of  when  the  export  rate  was  on  a 
lower  basis  than  that. 

Mr.  Day.  How  much  lower  basis  was  it  ? 

Mr.  Morton.  I  could  not  tell  you.  I  do  not  know  what  the  details 
are.     I  do  not  know  that  there  were  any  occasions. 

Mr.  Day.  Have  you  made  concessions  in  this  traffic  in  any  other 
form  than  the  one  which  you  have  mentioned? 


372  APPENDIX   G. 

Mr.  Morton.  No;  no  other  form.  This  rate,  by  the  way,  has  been 
open  to  everybody.  There  has  been  no  discrimination,  so -far  as  our 
company  is  concerned,  between  the  various  shippers  of  packing-house 
products  and  dressed  beef.  Any  shipper  that  used  our  line  we  would 
settle  with  on  that  basis. 

Mr.  Day.  How  was  this  traffic  billed  out? 

Mr.  Morton.  Billed  on  the  tariff. 

Mr.  Day.  How  was  the  adjustment  made? 

Mr.  Morton.  By  cash. 

]\rr.  Day.  At  the  timel 

Mr.  Morton.  Later. 

Mr.  Day.  It  was  billed  at  the  tariff  and  the  tariff  was  collectedt 

Mr.  Morton.  The  tariff  was  collected. 

Mr.  Day.  Were  there  claims  presented  for  settlement? 

Mr.  Morton.  Statements. 

Mr.  Day.  Presented  to  whom? 

Mr.  Morton.  To  our  freight  department. 

Mr.  Day.  Approved  there? 

Mr.  Morton.  Settled  there. 

Mr.  Day.  They  did  not  go  through  the  auditing  department? 

Mr.  Morton.  The  vouchers  went  through  the  auditing  department — 
any  vouchers  for  specific  accounts.  These  shippers  that  did  not  sign 
any  vouchers — some  settlements  have  been  made  through  connecting 
lilies. 

Mr.  Day.  Who  were  the  settlements  made  with? 

Mr.  Morton.  The  shipper. 

Mr.  Day.  Any  more  than  one? 

Mr.  Morton.  Yes,  sir. 

Mr.  Day.  Who  were  they? 

Mr.  Morton.  The  packing-house  owners.    Do  you  want  the  names? 

Mr.  Day.  Yes,  sir. 

Mr.  Morton.  The  principal  shipper  was  the  S.  &  S.  Company,  but 
settlements  have  been  made  with  other  people  shipping  at  the  same 
time. 

Mr.  Day.  Made  directly  with  the  houses  or  through  their  agents? 

Mr.  Morton.  Through  their  agents  that  have  charge  of  that  par- 
ticular branch  of  the  business. 

Mr.  Day.  What  other  concerns  did  you  carry  for  to  whom  concessions 
were  made  in  case  of  through  connecting  lines? 

Mr.  Morton.  I  think  all — Swift,  Armour 

Mr.  Day.  And  made  the  same  concessions  to  each? 

Mr.  Morton.  Yes.  There  has  been  no  discrimination,  as  far  as  the 
concession  was  concerned. 

Mr.  Day.  The  concession  was  alike  to  all  ? 

Mr.  Morton.  Yes,  sir. 

Mr.  Day.  Are  you  carrying  it  now  at  that? 

Mr.  Morton.  We  are  still  carrying  it  in  ou  that  basis? 

Mr.  Day.  Five  cents  off? 

Mr.  Morton.  Yes,  sir.    The  other  roads  know  about  it. 

Mr.  Day.  How  are  the  other  roads  informed  of  it? 

Mr.  Morton.  We  told  them. 

Mr.  Day.  When? 

Mr.  Morton.  At  various  times  in  meetings  and  conferences  respect- 
ing Missouri  River  rates.  We  are  willing  to  have  them  make  it  the 
open  rate,  and  ottered  to  do  it,  but  out  of  deference  to  some  of  the  other 
lines  we  did  not. 


APPENDIX  a.  373 

Mr.  Day.  You  mean  you  offered  to  make  it  the  open  rate? 

Mr.  MoETON.  The  published  tariff. 

Mr.  Day.  To  publish  that  as  the  tariff? 

Mr.  Morton.  Yes,  sir. 

Commissioner  Prouty.  If  you  did  know,  Mr.  Morton,  that  you  were 
obliged  to  publish  that  tariff"  and  keep  it  in  effect  lor  a  year,  would  you 
make  it? 

Mr.  Morton.  Under  the  circumstances;  yes,  sir. 

Mr.  Day.  You  made  the  contract  for  a  year? 

Mr.  Morton.  Those  were  the  only  terms  on  which  we  could  get  the 
business.    We  met  the  condition  that  was  before  us. 

Mr.  Day.  What  percentage  of  the  traffic  were  you  carrying  at  that 
time? 

Mr.  Morton.  Tjcss  than  2  per  cent — about  2  per  cent.  In  other 
words,  we  were  bringing  the  live  stock  into  Kansas  City,  supplying 
that  market  with  33|  i)er  cent  of  everything  that  came  in  there,  and 
then  we  lost  it.  Other  roads  took  it  up,  and  that  was  not  satisfactory 
to  us. 

Commissioner  Prouty.  How  many  packers  are  there  at  Kansas 
City? 

Mr.  Morton.  About  half  a  dozen. 

Commissioner  Prouty.  Might  they  combine  to  create  that  condition 
for  the  purpose  of  compelling  you  to  make  a  lower  rate? 

Mr.  Morton.  They  might;  yes,  sir — although  the  business  was  not 
all  moving  by  one  line.  There  might  have  been  a  combination  for  the 
purpose  of  forcing  this  condition. 

Commissioner  Prouty.  Did  you  believe  at  that  time  that  other  roads 
were  making  a  lower  rate  than  the  published  rate? 

Mr.  Morton.  I  believed,  and  it  subsequently  developed,  that  other 
roads  were  cutting  rates  at  that  time.  I  do  not  know  that  they  were 
cutting  it  5  cents,  but  they  were  cutting  it  3,  after  they  had  agreed  to 
maintain  the  tariff". 

Commissioner  Fifer.  What  do  you  say  is  a  proper  remedy  for  this 
situation? 

Mr.  Morton.  I  think  the  legalization  of  pooling  would  go  a  long  way 
toward  stopping  it. 

Commissioner  Prouty.  Who  do  you  think  gets  the  benefit  of  this 
reduction  ? 

Mr.  Morton.  If  it  is  a  secret  rate,  the  shipj^er;  if  it  is  an  open  rate, 
the  public. 

Commissioner  Prouty.  This  is  a  rate  that  seems  to  be  extended  to 
everybody. 

Mr.  Morton.  Well,  I  think,  in  a  case  of  that  kind,  there  was  possi- 
bly a  benefit  to  both  the  shipper  and  the  consumer.  Ordinarily,  I  think, 
the  consumer  pays  the  freight. 

Commissioner  Prouty.  But  in  this  case  the  previous  history  of  the 
thing  seems  to  have  been  that  you  start  periodically  with  the  main- 
tenance of  the  published  rate  and  then  gradually  drop  off".  That  prob- 
ably would  not  have  the  same  effect  as  a  permanent  reduction  of  the 
rate? 

Mr.  Morton.  That  is  my  idea  exactly. 

Commissioner  Clements.  Which  house  was  it  you  made  this  con- 
tract with  ? 

Mr.  Morton.  It  is  generally  known  as  the  S.  &  S.  Packing  Company. 
It  is  the  Schwarzschild  &  Sulzberger  Company  or  the  Sulzberger  & 
Schwarzschild  Company,  I  do  not  remember  which. 


;^74  APPENDIX    Q. 

Coiiimissioner  Clements.  Did  they  tell  you  that  they  were  getting 
a  lower  rate  by  some  io;uI  at  that  time? 

Mr.  Morton.  1  do  not  thiuk  they  did. 

Commissiouer  Clements.  You  made  that  contract  for  a  year  from 
what  time? 

Mr.  Morton.  I  think  the  contract  was  made  about  April  1.  I  do 
not  know  that  we  commenced  getting  the  business  until  June  1.  I 
think  the  contract  was  made  on  the  oOtli  of  June,  1001. 

Commissioner  Clements.  That  will  go  until  the  middle  of  this  year? 

Mr.  Morton.  Yes,  sir;  it  is  an  illegal  contract.  It  was  illegal  when 
we  made  it,  and  we  knew  that. 

Commissioner  Prouty.  Well,  it  would  not  be  an  illegal  contract  if 
you  carried  their  stuft"  from  there  to  Chicago  for  18i  cents  for  a  year? 

Mr.  Morton.  I  think  it  was  illegal  so  long  as  we  did  not  publish  the 
tariff.  If  we  jMiblished  the  taritt",  it  would  be  perfectly  legal.  My 
imj^ression  is  that  they  did  not  want  us  to  publish  the  tariff. 

Commissioner  Clements.  Why  not?    What  objection  did  they  have? 

Mr.  Morton.  Well,  I  do  not  know. 

Commissioner  Clements.  Can  you  tell  how  much  you  paid  out  in  a 
year  ? 

Mr.  Morton.  On  this  business? 

Commissioner  Clements.  Yes,  sir. 

Mr.  Morton.  No,  I  can  not. 

Commissiouer  Clements.  In  a  general  way,  I  mean. 

Mr.  Morton.  There  is  a  great  deal  more  money  paid  out  than  there 
ought  to  be. 

Commissioner  Clements.  Have  you  an  idea  whether  it  is  $50,000 
or  $100,000  or  $10,000— anything  definite?  Of  course,  if  it  is  a  mere 
guess  and  you  do  not  know 

Mr.  Morton.  Well,  I  thiuk  there  was  a  great  deal  more  than  any 
sum  you  mention  paid  out. 

Commissioner  Clements.  By  your  company? 

Mr.  Morton.  By  all  the  companies.  I  think  we  paid  out  $50,000  a 
year  or  more. 

Commissioner  Clements.  You  say  it  is  paid  in  cash  by  your  com- 
pany? 

Mr.  Morton.  Cash  settlements. 

Commissioner  Clements.  Who  is  it  paid  by?  What  officer  of  your 
company  hands  over  the  money? 

Mr.  Morton.  It  may  be  one  and  it  may  be  another. 

Commissiouer  Clements.  Under  what  department  would  it  be? 

Mr.  Morton.  The  traffic  department,  the  freight  department. 

Commissioner  Clements.  Who  would  have  the  direction  of  that? 
Who  would  see  that  it  was  paid?     Who  would  direct  it  to  be  done? 

Mr,  Morton.  I  would. 

Commissioner  Clements.  You  pass  a  voucher  along  to  somebody! 

Mr.  Morton.    Yes,  sir. 

Commissioner  Clements.  And  then  a  check  is  drawn  from  that? 

Mr.  Morton.  Yes. 

Commissioner  Clements.    On  the  road  ? 

Mr.  Morton.    On  the  bank  that  the  money  is  in? 

Commissioner  Clements.     Drawn  by  your  road  on  the  bankt 

Mr.  Morton.  Y^es,  sir. 

Commissioner  Clements.  In  favor  of  the  individual  with  whom  you 
made  the  deal? 

Mr.  Morton.  Yes,  sir. 


APPENDIX   G.  375 

Commissioner  Clements.  Not  the  firm? 

Mr.  Morton.  Not  the  firm;  it  may  be  the  firm.  It  depends  on  their 
ideas  in  regard  to  that.  Those  settlements  are  necessarily  made  in 
accordance  with  the  wishes  of  the  people  we  are  settling  with. 

Commissioner  Clements.  Who  sends  these  statements  in  upon 
which  the  checking  is  done"? 

Mr.  Morton.  The  parties  in  charge  of  that  particular  branch  of  the 
business. 

Commissioner  Clements.  Do  they  send  a  letter  with  it! 

Mr.  Morton.  Kot  necessarily;  they  may  bring  it  in.  It  is  done  in 
a  very  secret  way  generally.     They  are  very  careful. 

Commissioner  Clements.  Well,  I  suppose,  with  your  familiarity 
with  this  business,  you  could  give  us  a  statement  of  the  amount  of  the 
sbii)ments,  the  amount  collected,  the  rebates  paid  out,  and  who  to. 

Mr.  Morton.  That  could  be  done. 

Commissioner  Clements.  Have  you  named  the  individuals  you  dealt 
with  in  each  case  here? 

JMr.  Morton.  No,  I  have  not. 

Commissioner  Clements.  Will  you  give  the  names? 

Mr.  Morton.  I  did  not  deal  with  them  myself,  and  I  do  not  know  all 
of  the  individuals.     I  know  some  of  them. 

Commissioner  Clements.  So  far  as  you  do  know? 

Mr.  Morton.  Well,  I  would  prefer  not  to. 

Commissioner  Clements.  That  has  been  asked  everybody  else. 

Mr.  Morton.  I  have  not  heard  the  testimony  that  other  people  gave. 
Have  they  given  the  names. 

Commissioner  Clements.  Yes,  sir. 

Mr.  Morton.  I  would  rather  have  you  call  our  traffic  officers,  I  think, 
and  have  them  tell  you. 

Co]nmissioner  Clements.  Well,  if  they  can  do  it  better — it  is  the 
fact  we  want.     That  is  all.     Will  you  have  them  furnish  it? 

Mr.  Morton.  Yes,  sir;  we  will  be  glad  to  send  it  to  you.  I  will  be 
glad  to  post  myself  and  send  it  to  the  Commission. 

Commissioner  Clements.  If  you  will  send  us  a  statement  of  that 
sort  it  will  be  more  accurate  than  giving  it  from  memory. 

Commissioner  Prouty.  Did  you  ever  make  any  estimate  to  see  how 
much  it  cost  your  company  in  any  year  to  deviate  from  the  published 
rate — how  much  less  you  received  than  you  would  receive? 

Mr.  Morton.  In  regard  to  this  particular  business? 

Commissioner  Prouty,  No;  all  your  business. 

Mr.  Morton.  I  know  in  a  general  way. 

Commissioner  Prouty.  Taking  any  one  year,  how  much  would  it 
cost  your  railroad  ? 

Mr.  Morton.  I  should  think  between  $500,000  and  $1,000,000  a  year; 
nearer  a  half  a  million  than  a  million.  Of  course  a  good  many  of  those 
rates  are  made  for  the  promotion  of  local  industries,  and  are  perfectly 
proper  rates  to  make.  Nobody  is  aftected  except  the  parties  directly 
interested.  I  heard  a  question  asked  Mr.  Bird  in  regard  to  whether 
these  rates  have  been  reduced  or  not. 

Some  of  us  think  that  the  rates  on  packing-house  i)roducts  and 
dressed  beef  are  lower  than  they  ought  to  be,  and  while  there  has  been 
no  reduction  probably  in  ten  years,  there  has  been  a  very  substantial 
reduction  in  twenty  years  in  these  rates,  and  there  has  been  a  reduc- 
tion in  two  ways.  There  has  been  a  direct  reduction  in  the  rate  of 
freight,  and  there  has  been  a  most  wonderful  condensation  going  on 
which  people  do  not  generally  understand.    It  used  to  be  that  the 


376  APPENDIX   G. 

Western  railroads  hauled  corn.  It  is  generally  understood  that  it  takes 
about  3  carloads  of  corn  to  fatten  a  carload  of  cattle;  so  it  takes  6  car- 
loads of  corn  to  fatten  2  carloads  of  cattle;  and  it  takes  2  carloads  of 
cattle  to  make  1  carload  of  dressed  beef;  and  we  haul  dressed  beef 
to-day  from  the  Missouri  River  to  Chicago  at  about  the  same  rate  that 
we  used  to  get  for  hauling  a  carload  of  corn.  Ho  you  can  see  the 
wonderful  reduction  going  on  in  the  rate  of  freight  paid  to  the  railroads 
owing  to  the  condensation  that  has  been  going  on. 

Commissioner  Fifer.  About  one-sixth? 

Mr.  Morton.  About  one-sixth.  That  is  a  reduction  in  the  rate  of 
freight  that  the  country  generally  does  not  consider.  I  want  to 
answer  a  question  that  Commissioner  Fifer  asked.  I  do  not  think  that 
with  a  pooling  law  there  would  be  any  material  advance  in  the  rates, 
and  yet  I  think  there  might  be  specific  advances  in  the  rates  in  a  great 
many  instances.  There  might  be  advances  and  also  reductions,  but  I 
think  they  would  equalize  themselves  so  that  the  rates  would  be  fairer 
than  they  are  to  day  and  everybody  would  be  just  as  well  satisfied.  I 
do  not  think  we  are  justified  in  hauling  a  carload  of  beef  at  the  same 
rate  that  we  haul  a  carload  of  cattle,  per  hundred  pounds.  I  do  not 
think  there  is  any  more  justification  for  that  than  for  hauling  a  carload  of 
furniture  at  the  same  rate  as  a  carload  of  lumber,  per  hundred  pounds. 
And  that  is  what  we  are  doing  from  the  Missouri  River  to  Chicago. 
There  the  rate  on  dressed  beef  is  lower  than  it  ought  to  be  or  else  the 
rate  on  live  cattle  is  too  high. 

The  Chairman.  If  tliere  is  no  further  statement  you  care  to  make, 
Mr.  Morton,  you  will  be  excused. 

Mr.  Day.  I  want  to  ask  one  more  question,  Mr.  Morton,  regarding 
underweighing — concessions  by  false  weighing.  Does  that  obtain  at 
all  on  the  Atchison  road  I 

Mr.  Morton.  ISTot  where  we  can  prevent  it.  If  it  is  done  anywhere, 
it  is  in  spite  of  the  best  efforts  we  can  put  forward  to  prevent  it.  These 
packing-house  shipments  are  supposed  to  be  checked  by  an  association 
which  we  have  at  the  point  of  loading.  It  is  i)retty  difficult,  I  am  told, 
at  times  to  get  the  i)roper  weights,  and  there  are  probably  instances 
where  the  weights  are  inaccurately  given  us. 

Commissioner  Clements.  In  this  particular  contract  you  made  for  a 
year,  did  you  deal  with  the  firm  or  their  traffic  official? 

Mr.  Morton.  I  dealt  with  their  traffic  man.  At  the  time  I  made 
that  arrangement  I  did  it  with  the  full  intention  of  publishing  that  rate 
in  case  it  became  necessary — in  case  the  other  roads  did  not  object. 
The  only  reason  we  have  not  published  it  was  out  of  deference  to  the 
other  lines. 

Commissioner  Clements.  And  to  the  shipper;  he  did  not  want  it 
published? 

Mr.  Morton.  I  do  not  think  the  shipper  wanted  it  published.  I 
think  he  preferred  to  have  it  the  way  it  was,  although  I  do  not  know 
that  any  conversation  ever  took  place  in  regard  to  that  part  of  it. 

Commissioner  Clements.  That  is  all. 

The  witness  was  excused. 

Mr.  Day.  S.  B.  Knight. 

(No  response.) 

Mr.  Day.  Mr.  McCabe  wants  to  correct  a  statement  he  made,  your 
honors. 

Mr.  McCabe.  I  want  to  correct  a  statement  I  made  this  morning 
(page  97)  wherein  I  stated  that  the  export  bills  of  lading  issued  by 
our  lines  from  Chicago  are  issued  by  Mr.  Lawrence.    I  find  that  I  was 


APPENDIX    G.  B77 

mistaken  and  that  those  bills  of  lading,  the  through  bills  of  ladling,  are 
issued  by  our  own  representative.     I  wanted  to  correct  that  part  of  it. 
Mr.  Day.  Mr.  Gramnier,  will  you  take  the  stand. 

G.  J.  Grammer,  being  duly  sworn,  testified  as  follows: 

Mr.  Day.  Will  you  please  give  your  full  name  and  official  relation  to 
the  Lake  Shore. 

Mr.  Grammer.  G.  J.  Grammer,  general  traffic  manager  Lake  Shore 
road. 

Mr.  Day.  You  know  the  subject  of  inquiry  here,  Mr.  Grammer.  If 
you  will  state  to  the  Connuissiou  what  practices  have  i)revailed  on  the 
Lake  Shore  system,  or  in  wliich  it  has  participated  during  the  year 
1901,  or  specifically  from  July  1  or  April  1,  regarding  packing  house 
products  and  dressed  meats  in  the  way  of  concessions  in  rates. 

Mr.  Grammer.  Beginning  in  1901  we  maintained  published  rates  in 
good  condition.  Rates  were  restored  on  all  property  by  all  lines  and 
all  routes.  That  condition  during  January,  1901,  was  so  satisfactory 
to  me  that  I  went  to  California  and  was  gone  a  little  over  two  months. 
When  I  got  back  L  found  that  conditions  had  materially  changed  and 
they  were  the  subject  of  conferences  from  that  time.  The  dressed  beef 
had  left  us  and  they  gave  as  a  reason  that  we  were  not  meeting  condi- 
tions. Finally,  on  July  21,  at  a  full  conference  between  east-bound 
roads  at  which  information  bearjng  on  the  rates  on  provisions  and 
packing-house  products  and  dressed  beef  was  fully  canvassed,  so  that 
all  understood  then  what  the  rates  were,  most  of  the  roads  published  a 
tariif  on  dressed  beef  on  a  basis  of  40  cents  from  Chicago  to  New  York. 
It  was  understood  that  the  rate  on  export  provisions  was  25  cents  and 
on  domestic  30.  In  a  few  days  it  was  shown  that  there  was  evidence 
of  an  agreement  or  contract  by  which  dressed  beef  was  taken  to  the 
seaboard  from  Chicago  for  36J  cents.  So  the  result  was  that  that  had 
to  be  met  or  we  had  to  go  out  of  the  business.  Speaking  for  the  Lake 
Shore  we  met  conditions  and  billed  the  property  at  a  flat  rate  and  had 
no  settlement  to  make. 

Mr.  Day.  At  what  rate? 

Mr.  Grammer.  Boston  and  New  York  36J  cents,  and  all  the  other 
business  40  cents. 

Mr.  Day.  The  published  rate  being  at  the  time 

Mr.  Grammer.  Forty  cents.  The  provision  business  we  have  been 
practically  out  of  for  two  or  three  years.  I  do  not  think  we  handled  in 
1901 1  per  cent  of  the  business  from  Chicago  and  Chicago  junctions.  The 
reason  was  that  every  time  we  go  into  tlie  business  the  rates  seem  to 
go  to  pieces.  There  is  no  revenue  in  it  from  our  standpoint.  There  is 
nothing  in  it,  so  I  have  kept  out  of  the  business.  We  have  received 
more  or  less  provisions  from  different  shippers  and  different  routes,  but 
all  our  solicitors  are  instructed  positively  not  to  solicit  provisions  at 
less  than  the  full  authorized  rate.  We  had  some  contests  and  have 
some  to-day,  as  to  whether  or  not  we  should  settle  for  that,  which  I 
have  declined  to  do.  To  give  you  an  example  about  provisions :  The 
provision  business,  taken  from  Chicago,  the  minimum  weight — and 
that  is  generally  the  maximum — is  28,000  pounds.  At  least  75  per 
cent  of  the  provision  business  which  originates  in  Chicago  and  in  the 
west  is  export.  That  is  explained:  Nearly  all  the  cattle  produced  in 
Indiana,  Ohio,  Michigan,  and  Pennsylvania,  cattle  and  hogs,  are  ship- 
ped east  as  live  stock,  and  a  very  large  percentage  of  those  are  slaugh- 
tered there  and  sold.  Two  or  three  of  the  largest  slaughterhouses  in 
the  country  are  in  Boston  and  there  are  four  or  five  in  New  York.    So 


378  APPENDIX   G. 

dressed  meats  in  New  York  are  worth  more  money  than  the  western 
dressed  meats  at  all  time,  and  any  one  familiar  with  that  knows  that  to 
be  true.  So  a  large  percentage  of  tlie  dressed  meats  that  go  east  are 
for  export,  whether  they  originated  on  the  river,  at  Chicago,  Peoria, 
or  wherever  packed. 

The  Chairman.  Do  you  mean  dressed  meats  or  provisions! 

Mr.  Grammek.  Dressed  meats,  I  mean.  We  speak  of  dressed  meats 
as  fresh  meats.     Provisions  mean  all  the  articles  taking  provision  rates. 

The  Chairman.  You  are  really  speaking  of  provisions  and  not  dressed 
beef? 

Mr.  Grammer.  Yes,  sir.  Provisions  mean  cut  meats,  lard,  and  all 
packiug-liouse  products  outside  of  dressed  meats,  shipped  as  fresh  meat, 
such  as  fresh  beef  and  sheep,  etc.  I  was  going  to  say,  to  explain  my 
position,  take  a  car  of  provisions  at  a  minimum  weight  of  28,000  pounds 
that  originates  at  Chicago.  The  rate  is  25  cents.  That  is  about  the 
maximum  rate  obtained  this  year,  1001,  and  that  means  $70  a  car.  We 
pay  out  of  that  to  the  stock  yards  $2.40  a  car  for  switching,  we  pay  $15 
car  mileage  for  a  round  trip  of  the  car,  and  at  New  York  we  pay  3 
cents  a  hundred  lighterage;  that  is  $2.40  and  $15,  $17.40,  and  $8.40— 
$25.80,  which  we  pay  out  of  that  rate  as  absolute  arbitraries.  Tliat 
laaves  the  Lake  Shore  $16  or  $17  net  for  hauling  that  car  to  Buffalo, 
with  the  return  car  empty,  and  we  have  to  give  practically  passenger 
service  to  that  traffic.  I  think  it  is  unremunerative  business,  and  I 
have  always  taken  the  position  that  we  did  not  want  any  provisions  on 
the  Lake  Shore  road  at  less  than  the  full  tariff  rate,  whatever  that 
might  be.  The  dressed  beef  minimum  will  average  22,000.  That  car  is 
subject  to  the  same  arbitraries  and  mileage.  The  lighterage  is  3  cents  a 
hundred,  which  would  be  $0.00  instead  of  $8.40,  and  it  is  subject  to  the 
same  service  eastbound  and  westbound  as  to  movement;  and  there  is 
not  1  per  cent  of  those  cars  loaded  east  with  dressed  beef  that  are  loaded 
with  any  freight  coming  west.  There  may  be  a  few  ai)ples  daring  the 
fruit  season,  or  something  of  that  kind.  As  I  said  before,  we  handle 
that  business  on  a  flat  billing.  There  is  no  voucher  to  make  out,  no 
settlements.  When  there  is  any  settlement  of  that  character,  we  have 
a  method  of  settling  which  is  substantially  as  follows:  Jf  the  rate  is 
n)ade  from  Chic:igo,  the  Chicago  officer  O.  K.'s  the  account.  That  is 
sent  to  the  line  manager.  He  audits  it  and  settles  it.  I  never  see  the 
voucher.  I  never  approved  a  voucher  and  never  would  approve  one 
that  carries  a  rebate. 

Mr.  Day.  Who  does  it  for  your  road? 

Mr.  Grammer.  We  do  not  have  it  done  on  our  road.  It  is  settled  in 
the  line  account.  The  auditor  is  there  and  sees  that  the  proper  charge 
is  made  against  the  road. 

Mr,  Day.  You  say  your  agent  is  at  the  line-office  settlement? 

Mr.  Grammer.  He  simply  O.  K.'s  the  account.  If  the  shipper  puts 
in  a  claim  against  us,  he  simi)ly  O.  K.'s  it  as  to  whether  the  amount  is 
correct.  Then  it  is  sent  to  the  line  manager.  The  line  manager  has 
a  billing  check  and  the  record  to  see  that  it  is  correct,  and  then  a 
representative  of  the  auditing  department  checks  those  accounts 
and  he  is  authorized  to  pay,  and  we  are  charged  in  the  line  account  our 
proportion. 

Mr.  Day.  Is  there  no  approval  of  any  general  officer? 

Mr.  Grammer.  No,  sir. 

Mr.  Day.  That  is  all  under  your  general  supervision? 

Mr.  Grammer.  Every  rate  made,  I  give  the  authority — of  any  kind. 

Mr.  Day.  And  where  a  rebate  is  paid  your  share  of  the  rebate  is 


APPENDIX    G.  379 

collected  tlirough  the  fast  freight  line  agency  and  he  disburses  the 
money? 

Mr.  Grammer.  Yes;  that  is,  he  collects  it  from  us. 

Mr.  Day.  And  pays  it  to  the  shipper? 

Mr.  Grammer.  Yes,  sir.  I  have  heard  a  question  asked  here  of 
almost  every  person,  as  to  whether  or  not  the  exi)ort  rates  can  be  pub- 
lished. It  seems  to  me  they  ouglit  to  uuderstaud  that  very  thoroughly. 
Theoretically  it  looks  very  nice,  but  it  is  a  question  whether  it  can  be 
done  unless  a  new  situation  obtains.  I  will  explain  that.  If  the  rate 
on  provisions  from  Chicago  to  New  York  is  27  cents  and  from  Chicago 
to  Baltimore  it  is  24  cents,  very  frequently  the  same  ocean  rate  is  in 
effect  from  Baltimore  and  New  York,  so  a  line  competing  by  New  York 
with  a  combination  of  rates,  in  order  to  get  the  business  has  to  cut  the 
rate  3  cents,  and  it  is  no  unusual  thing  that  a  line  working  via  Port- 
land will  make  the  rate  via  Baltimore.  So,  if  you  undertake  in  that 
case  to  publish  the  rate,  you  would  have  a  different  tariff'  on  every 
shipment.  So  in  theory  it  looks  very  pretty,  but  in  practice  it  will 
not  work.  There  is  another  solution.  If  a  legitimate  combination  is 
really  made  through  Baltimore  that  is  lower  than  can  be  made  by  any 
other  route,  let  the  other  roads  stay  out  of  the  export  traffic,  and  then 
it  might  regulate  itself  by  the  ocean  carriers  making  a  lower  rate. 
That  probably  has  been  tried  for  years.  It  has  never  worked.  Another 
thing  about  this  export  rate,  making  it  5  cents  less  than  the  domestic 
rate,  the  presumption  was,  and  the  instructions,  that  this  rate  should 
be  billed  flat  wherever  there  was  actually  an  export  bill  of  lading 
issued  under  a  through  contract.  That  of  itself  insured  the  absolute 
delivery  to  the  vessel,  so  it  could  not  be  diverted  domestically.  But 
there  were  a  great  many  jjrovisions  that  would  be  shipped  to  New 
York  in  care  of  the  exi^ort  agent,  and  there  was  evidence  last  spring 
of  that  being  tampered  with,  so  we  adopted  the  plan  that  that  property 
would  be  billed  at  the  domestic  rate  and  when  it  was  exported  it  would 
be  corrected  back  to  the  export  rate.  That  prevented  the  manipulation 
of  the  export  rate  of  domestic  business. 

Mr.  Day.  This  traffic  on  which  you  make  concessions,  when  was  the 
first  concession  made  last  year? 

Mr.  Grammer.  I  do  not  know  exactly.  We  felt  that  the  rate  was 
absolutely  maintained  from  the  1st  of  January. 

Mr.  Day.  Up  to  when? 

Mr.  Grammer.  From  the  1st  of  January  up  to  about  the  1st  of 
March  it  was  by  a  good  many  lines;  by  some  it  was  not.  Subse- 
quently it  developed — our  own  shippers  produced  evidence  that  they 
were  shipping  by  other  roads  for  less  money.  Then  the  question  came 
up  whether  we  would  settle  with  them.  Those  things  are  all  bones  of 
contention.  It  takes  a  long  time  sometimes  to  dispose  of  them.  Our 
method  is  to  try  and  do  it  without  making  a  fuss.  That  business 
would  be  over  our  belt  lines,  and  we  would  probably  have  it  corrected 
through  the  billing.     I  do  not  think  that  was  done  prior  to  June. 

Mr.  Day.  You  think  that  prior  to  June  1  your  road  absolutely  main- 
tained its  published  tariffs? 

Mr.  Grammer.  No,  I  will  not  say  that;  but  we  came  as  near  doing 
it  as  we  have  done  any  time  in  six  months  for  the  past  several  years. 
There  were  instances 

Mr.  Day.  You  mean  in  instances  you  did  meet  the  cut? 

Mr.  Grammer.  Yes,  sir.  We  are  not  the  originating  line.  Where 
we  get  it  from  a  connection  we  frequently  join  in  that. 


380  APPENDIX   Q. 

Mr.  Day.  Take  the  instances  where  you  are  the  originating  line  and 
met  the  cut  prior  to  June  1,  in  wliose  behalf  did  you  meet  that? 

Mr.  Grammer.  If  we  met  any  cuts  then  it  applied  to  that  particular 
business. 

Mr.  Day.  Who  were  they? 

Mr.  Gramjvieti.  Our  principal  houses  were  Armour  &  Co.,  Swift  & 
Co.,  and  Morris.  They  are  the  principal  ones.  We  get  none  from 
Hammond.    We  have  no  connection  with  them. 

Mr.  Day.  How  much  concession  was  made  in  those  three  instances 
you  s])eak  of  prior  to  June  1? 

Mr.  Grammer.  I  do  not  believe  they  had  any  concession  given. 
There  was  a  contention  about  it,  but  we  had  no  agreed  concession;  but 
I  think  after  June  we  settled  on  5  cents  a  hundred. 

Mr.  Day.  That  was  done  by  correcting  the  billing! 

Mr.  Grammer.  Correcting  the  billing. 

Mr.  Day.  You  had  no  vouchers? 

Mr.  Grammer.  No,  sir. 

Mr.  Day.  Well,  if  you  corrected  the  billing  there  must  have  been  a 
refund? 

Mr.  Grammer.  Well,  they  are  large  shippers,  and  we  always  hold 
some  money  of  theirs. 

Mr.  Day.  Oh,  you  simply  give  them  credit  for  it. 

Mr.  Grammer.  Yes,  sir. 

Mr.  Day.  Who  approved  of  those  credits? 

Mr.  Gramivier.  Wherever  a  matter  of  that  kind  is  done  the  state- 
ment is  made  up  and  the  auditor  always  has  knowledge  of  it. 

Mr.  Day.  Where  does  he  get  his  information? 

Mr.  Grammer.  He  gets  his  information  through  my  office  indirectly. 

Mr.  Day.  In  the  form  of  written  instructions? 

Mr.  Gramivier.  In  a  case  of  that  kind  I  generally  take  the  paper  up 
to  him  and  tell  him  that  is  correct.     We  are  all  in  the  same  building. 

Mr.  Day.  How  long  did  you  keep  in  this  concession  of  5  cents  after 
you  first  put  it  in? 

Mr.  Grammer.  We  did  not  have  a  concession  in  until  after  June, 
and  then  on  a  Hat  billing. 

Mr.  Day.  How  long  did  you  keep  in  this  flat  billing! 

Mr.  Grammer.  Until  January  1st. 

Mr.  Day.  Twenty-five  cents  to  New  York? 

Mr.  Grammer.  On  provisions,  25  cents. 

Mr.  Day.  And  fresh  meats? 

Mr.  Grammer.  Thirty-six  and  three-quarters  cents. 

Mr.  Day.  Are  you  carrying  now  on  those  rates? 

Mr.  Grammer.  No,  sir;  we  have  no  agreement  with  any  shipper  in 
the  world  on  anything. 

Mr.  Day.  Have  you  an  understanding  that  if  others  do  it  you  will 
conform  to  the  rate? 

Mr.  Grammer.  No,  sir;  I  have  made  up  my  mind  that  in  the  future 
it  will  be  on  the  open  tariff' and  everybody  will  have  to  dance  to  that 
music.  I  am  out  of  patience  with  that  method  of  doing  business.  I 
know  we  will  make  no  friends,  but  I  am  tired  of  it. 

Mr.  Day.  On  export  traffic  that  has  its  origin  here,  do  you  issue 
through  bill  to  foreign  ports? 

Mr.  Grammer.  Yes,  sir;  that  is  done  through  our  line  office,  fast 
freight  line  office. 

Air.  Day.  You  have  your  own  lines  of  steamers! 


APPENDIX   G.  381 

Mr.  Gkammer.  Yes,  sir;  we  have  four  lines  working  over  the  Lake 
Shore — the  Red  Line 

Mr.  Day.  I  mean  lines  of  steamers. 

Mr.  GiiAMMER.  No,  we  have  no  line  of  steamers.  We  work  with  the 
public  steamers.  We  have  a  foreign  agent  at  Boston,  New  York,  and 
Philadelphia — contribute  to  his  salary  and  he  makes  the  contract. 

Mr.  Day.  Has  your  line  participated  in  any  arrangement  during 
the  past  year  by  which  traffic  was  taken  at  the  going  export  rate  plus 
the  steamer  rate  and  subsequently  that  rate  was  corrected  and  reduced 
by  a  division  between  the  railroad  company  and  steamship  company? 

Mr.  Grajvimer.    No.     I  do  not  know  anything  about  it. 

Commissioner  Clements.  Your  road  terminates  at  Buffalo? 

Mr.  Grammer.  At  Buifalo. 

Commissioner  Clements.  Do  your  connections  east,  respecting  ship- 
ments of  the  kind  you  have  testified  about  that  originate  at  Chicago, 
participate  in  the  shrinkage  of  the  rate? 

Mr.  Grammer.  Always.  Whatever  the  rate  is,  they  get  their  per- 
centage. 

Commissioner  Clements.  They  get  their  jiercentage  of  the  rate? 

Mr.  Grammer.  On  the  basis  of  the  mileage,  whatever  tlie  rate  may  be. 

Commissioner  Clements.  So  they  share  in  the  shrinkage  with  you 
to  Boston  ? 

Mr.  Grammer.  To  Boston,  New  York,  and  every  point  east  of  Buf- 
falo, by  every  road. 

Commissioner  Clements.  At  what  other  places  east  of  Chicago  do 
you  get  products  of  this  kind? 

Mr.  Grammer.  The  only  place  we  have  is  Cleveland. 

Commissioner  Clements.  How  have  the  rates  been  there  the  past 
few  years  ? 

Mr.  Grammer.  The  Cleveland  situation  is  always  a  troublesome  one 
with  us,  because  we  are  hardly  ever  in  the  provision  business  here,  and 
we  endeavor  to  keep  those  people  on  a  level  with  the  Chicago  basis. 

Commissioner  Clements.  Do  they  get  a  cut  corresponding? 

Mr.  Grammer.  Practically  so,  and  we  settle  that  by  a  correction  of 
the  billing. 

Commissioner  Clements.  Do  you  know  how  it  was  in  respect  to 
your  connections  east  in  dealing  with  Buffalo"? 

Mr.  Grammer.  I  do  not  know  anything  about  that. 

Commissioner  Clements.  You  do  not  know  whether  they  get  a  cut? 

Mr.  Gr ameer.  No,  sir. 

Commissioner  Clememts.  There  are  some  packing  houses  there  of 
some  importance,  are  there  not? 

Mr.  Grammer.  1  think  not.  There  used  to  be  one,  but  I  do  not  think 
they  amount  to  anything  now.  The  Dold  people  were  there.  I  do  not 
think  there  is  a  house  in  Buffalo  that  does  a  regular  packing-house 
business — export  business. 

Commissioner  Clements.  I  do  not  mean  export. 

Mr.  Grammer.  I  do  not  believe  there  is  a  house  there  now  that 
amounts  to  much. 

Commissioner  Clements.  Do  you  mean  by  that  absolutely  none  or 
that  they  are  not  important? 

Mr.  Grammer.  Well,  I  guess  there  may  be  two  or  three  small  houses 
but  they  are  not  a  factor  in  the  shipment.  It  is  more  a  domestic  ques- 
tion with  them. 

Commissioner    Clements.  Eate  cutting  from   the    west    such  as 


382  APPENDIX   G. 

described  here  to  day  would  be  very  severe  on  them,  little  or  big,  unless 
they  shared  in  it,  would  it  not? 

Mr.  Grammer.  I  have  no  doubt  that  any  house  in  Buffalo  aftected 
by  that  would  be  amply  protected  by  eastern  roads. 

Commissioner  Clements.  Can  you  give  a  statement  of  all  shipments 
over  your  road  the  past  year  showing  the  difference  between  the  pub- 
lished rate  and  actual  rate,  whether  adjusted  by  rebate  or  otherwise? 

Mr.  Grammer.  I  think  that  could  be  done  but  I  would  have  to  have 
the  consent  of  our  attorneys  and  general  officers  to  that  effect. 

Commissioner  Clements.  It  is  a  thing  that  can  be  done? 

Mr.  Grammer.  It  is  a  possibility,  yes,  sir. 

Commissioner  Clements.  And  showing  the  amount  borne  by  your 
connections  east  in  each  case? 

Mr.  GRAMMEii.  Showing  the  whole  thing,  yes,  sir.    ' 

Commissioner  Clements.  That  is  all. 

The  Chairman.  That  seems  to  be  all. 

The  witness  was  excused. 

Mr.  Day.  I  think  I  have  called  all  the  witnesses  I  have,  your  honors, 
that  are  present. 

The  Chairman.  Gentlemen,  I  may  say,  for  the  information  of  those 
interested,  tliat  in  the  judgment  of  the  Commission,  it  is  not  necessary 
to  take  any  more  testimony  in  this  proceeding  during  this  visit.  Such 
witnesses  as  are  in  attendance  will,  therefore,  be  excused  until  they 
are  requested  to  meet  us  at  some  otlier  time  and  place;  that  is,  in  this 
particular  investigation  we  have  had  up  to-day,  in  the  matter  of  rates 
on  packing-house  products.    We  will  now  adjourn. 

At  5.20  o'clock  the  Commission  adjourned. 


INDEX  TO  APPENDIX  G. 


Page. 

Barnard,  T.  J 277 

Bird,  A.  C 365 

Chicago  hearing 293 

ColUster,.!.  J  .  1 271 

Cost,  Edward  F 330,  384 

Everest,  W.  E 279 

Gault,  F.  M 259 

Gavin,  J.  E 280 

Golden,  H.  C , 267 

Grammer,  G.  J 377 

Harvev,  William " 284 

Hitchins,  E.  S 230 

Hard,  D.  F 246 

Johnson,  J.  M 347 

Kansas  City  lieariug 229 

Kreskv,  D."  H " 283 

Lund,  J.  D 286 

McAllister,  8.  D 278 

IMcCabe,  D.  T 318,  334,  377 

JNIcKone,  W.  J 257 

Marshall,  W.  N 260 

Miller,  Thomas 356 

Mitchell,  B.  B 335 

Morton,  Paul 371 

Shannon,  J.  A 283 

AVann,  Fred  A 359 

Whitney,  C.  E 293 

383 

o 


1 


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